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Non-Bayesian social learning

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  • Jadbabaie, Ali
  • Molavi, Pooya
  • Sandroni, Alvaro
  • Tahbaz-Salehi, Alireza

Abstract

We develop a dynamic model of opinion formation in social networks when the information required for learning a parameter may not be at the disposal of any single agent. Individuals engage in communication with their neighbors in order to learn from their experiences. However, instead of incorporating the views of their neighbors in a fully Bayesian manner, agents use a simple updating rule which linearly combines their personal experience and the views of their neighbors. We show that, as long as individuals take their personal signals into account in a Bayesian way, repeated interactions lead them to successfully aggregate information and learn the true parameter. This result holds in spite of the apparent naïveté of agentsʼ updating rule, the agentsʼ need for information from sources the existence of which they may not be aware of, worst prior views, and the assumption that no agent can tell whether her own views or those of her neighbors are more accurate.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 76 (2012)
Issue (Month): 1 ()
Pages: 210-225

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Handle: RePEc:eee:gamebe:v:76:y:2012:i:1:p:210-225

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: Social networks; Learning; Information aggregation;

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References

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  1. Bala, V. & Goyal, S., 1995. "Learning from Neighbors," Econometric Institute Research Papers EI 9549-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  2. Banerjee, Abhijit & Fudenberg, Drew, 2004. "Word-of-mouth learning," Games and Economic Behavior, Elsevier, Elsevier, vol. 46(1), pages 1-22, January.
  3. Allison, G. & Fudenberg, D., 1992. "Rules of Thumb for Social Learning," Working papers 92-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Epstein, Larry G. & Noor, Jawwad & Sandroni, Alvaro, 2008. "Non-Bayesian updating: A theoretical framework," Theoretical Economics, Econometric Society, Econometric Society, vol. 3(2), June.
  5. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 797-817, August.
  6. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  7. Daron Acemoglu & Munther A. Dahleh & Ilan Lobel & Asuman Ozdaglar, 2008. "Bayesian Learning in Social Networks," NBER Working Papers 14040, National Bureau of Economic Research, Inc.
  8. Smith, L. & Sorensen, P., 1996. "Pathological Outcomes of Observational Learning," Working papers 96-19, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. A. Banerjee & Drew Fudenberg, 2010. "Word-of-Mouth Communication and Social Learning," Levine's Working Paper Archive 425, David K. Levine.
  10. Peter M. Demarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion Bias, Social Influence, And Unidimensional Opinions," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(3), pages 909-968, August.
  11. Kalai, Ehud & Lehrer, Ehud, 1994. "Weak and strong merging of opinions," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 73-86, January.
  12. Acemoglu, Daron & Ozdaglar, Asuman & ParandehGheibi, Ali, 2010. "Spread of (mis)information in social networks," Games and Economic Behavior, Elsevier, Elsevier, vol. 70(2), pages 194-227, November.
  13. Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, Elsevier, vol. 45(2), pages 329-346, November.
  14. Ali Jadbabaie & Alvaro Sandroni & Alireza Tahbaz-Salehi, 2010. "Non-Bayesian Social Learning, Second Version," PIER Working Paper Archive 10-005, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Feb 2010.
  15. Rosenberg, Dinah & Solan, Eilon & Vieille, Nicolas, 2009. "Informational externalities and emergence of consensus," Games and Economic Behavior, Elsevier, Elsevier, vol. 66(2), pages 979-994, July.
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Citations

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Cited by:
  1. Ilan Lobel & Evan Sadler, 2013. "Preferences, Homophily, and Social Learning," Working Papers, NET Institute 13-01, NET Institute.
  2. Rajiv Sethi & Muhamet Yildiz, 2013. "Perspectives, Opinions, and Information Flows," Levine's Working Paper Archive 786969000000000934, David K. Levine.
  3. Pietro Battiston & Luca Stanca, 2014. "Boundedly Rational Opinion Dynamics in Directed Social Networks: Theory and Experimental Evidence," Working Papers, University of Milano-Bicocca, Department of Economics 267, University of Milano-Bicocca, Department of Economics, revised Jan 2014.
  4. Liu, Qipeng & Wang, Xiaofan, 2013. "Social learning with bounded confidence and heterogeneous agents," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 392(10), pages 2368-2374.

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