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Social Learning from Private Experiences: The Dynamics of the Selection Problem

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  • Charles F. Manski

Abstract

I analyse social interactions that stem from the successive endeavours of new cohorts of heterogeneous decision makers to learn from the experiences of past cohorts. A dynamic process of information accumulation and decision making occurs as the members of each cohort observe the experiences of earlier ones, and then make choices that yield experiences observable by future cohorts. Decision makers face the "selection problem" as they seek to learn from observation of past actions and outcomes, while not observing the counterfactual outcomes that would have occurred had other actions been chosen. Assuming that all cohorts face the same outcome distributions, I show that social learning is a process of sequential reduction in ambiguity. The specific nature of this process, and its terminal state, depend critically on how decision makers make choices under ambiguity. I use the problem of learning about innovations to illustrate. Copyright The Review of Economic Studies Limited, 2004.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 71 (2004)
Issue (Month): 2 (04)
Pages: 443-458

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Handle: RePEc:bla:restud:v:71:y:2004:i:2:p:443-458

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Cited by:
  1. H. Peyton Young, 2009. "Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning," American Economic Review, American Economic Association, vol. 99(5), pages 1899-1924, December.
  2. Jan-Dirk Schmöcker & Tsuyoshi Hatori & David Watling, 2014. "Dynamic process model of mass effects on travel demand," Transportation, Springer, vol. 41(2), pages 279-304, March.
  3. Linda Datcher Loury, 2006. "All in the Extended Family: Effects of Grandparents, Aunts, and Uncles on Educational Attainment," American Economic Review, American Economic Association, vol. 96(2), pages 275-278, May.
  4. Giulio Zanella, 2004. "Social Interactions and Economic Behavior," Department of Economics University of Siena 441, Department of Economics, University of Siena.
  5. Galichon, Alfred & Henry, Marc, 2013. "Dilation bootstrap," Journal of Econometrics, Elsevier, vol. 177(1), pages 109-115.
  6. Nathan Yang, 2011. "An Empirical Model of Industry Dynamics with Common Uncertainty and Learning from the Actions of Competitors," Working Papers 11-16, NET Institute.
  7. Rafael Lalive & M. Alejandra Cattaneo, 2009. "Social Interactions and Schooling Decisions," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 457-477, August.
  8. Michael Lechner & Ruth Miquel, 2010. "Identification of the effects of dynamic treatments by sequential conditional independence assumptions," Empirical Economics, Springer, vol. 39(1), pages 111-137, August.
  9. Schanne, Norbert, 2012. "The formation of experts' expectations on labour markets : do they run with the pack?," IAB Discussion Paper 201225, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  10. Galichon, Alfred & Henry, Marc, 2009. "A test of non-identifying restrictions and confidence regions for partially identified parameters," Journal of Econometrics, Elsevier, vol. 152(2), pages 186-196, October.
  11. Mengel, Friederike, 2008. "Matching structure and the cultural transmission of social norms," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 608-623, September.
  12. Ethan Cohen-Cole & Giulio Zanella, 2008. "Welfare Stigma or Information Sharing? Decomposing Social Interactions Effects in Social Benefit Use," Department of Economics University of Siena 531, Department of Economics, University of Siena.

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