The Other Invisible Hand: How Markets—as Institutions—Propagate Conformity and Valuation Errors

S. S. Levine and E. J. Zajac designed the studies, which were conducted and analyzed by S. S. Levine. S. S. Levine and E. J. Zajac wrote the manuscript. The authors benefited from the suggestions of Martin Conyon, Rachel Croson, Peter Hedström, Martin Kilduff, Robert Kurzban, Massimiliano Landi, Charles Plott, Sampsa Samila, Niro Sivanathan, Zur Shapira, and Klaus Weber. Martin Dufwenberg and Tobias Lindqvist have shared their instrument and advice with us most collegially. The authors received useful comments from participants at the meetings of the American Economic Association, the American Sociological Association, and the Academy of Management. The authors also benefited from the discussions that ensued during presentations at the University of Southern California, the Technion, the Israel Strategy Conference, and the Institutional Theory Conference at the University of Alberta. Oi Ying Lam managed the research effort and conducted the experimental sessions together with Jin Cai Chua, Jun Jie Tong, and Kok Hsien Yeo, while Sun Li assisted with the statistical analysis. S. S. Levine is also thankful for the support of the Institute for Social and Economic Research and Policy (ISERP) at Columbia University in the City of New York. An earlier version was published in the Best Paper Proceedings of the Academy of Management. Some of the work was featured in working papers titled “The Institutional Nature of Price Bubbles” (“https://papers.ssrn.com/abstract=960178”) and “When and Where Can Institutionalization Occur?” (“https://papers.ssrn.com/abstract=1352112”).