American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Social Learning with Coarse Inference
American Economic Journal: Microeconomics
vol. 5,
no. 1, February 2013
(pp. 147–74)
Abstract
We study social learning by boundedly rational agents. Agents take a decision in sequence, after observing their predecessors and a private signal. They are unable to make perfect inferences from their predecessors' decisions: they only understand the relation between the aggregate distribution of actions and the state of nature, and make their inferences accordingly. We show that, in a discrete action space, even if agents receive signals of unbounded precision, there are asymptotic inefficiencies. In a continuous action space, compared to the rational case, agents overweight early signals. Despite this behavioral bias, eventually agents learn the realized state of the world and choose the correct action. (JEL D82, D83)Citation
Guarino, Antonio, and Philippe Jehiel. 2013. "Social Learning with Coarse Inference." American Economic Journal: Microeconomics, 5 (1): 147–74. DOI: 10.1257/mic.5.1.147JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief
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