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An Experimental Test of Advice and Social Learning

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Author Info

  • Bo\u{g}açhan Çelen

    ()
    (Graduate School of Business, Columbia University, New York, New York 10027)

  • Shachar Kariv

    ()
    (Department of Economics, University of California, Berkeley, Berkeley, California 94720)

  • Andrew Schotter

    ()
    (Department of Economics, New York University, New York, New York 10012)

Abstract

Social learning describes any situation in which individuals learn by observing the behavior of others. In the real world, however, individuals learn not just by observing the actions of others but also from seeking advice. This paper introduces advice giving into the standard social-learning experiment of Çelen and Kariv (Çelen, B., S. Kariv. 2005. An experimental test of observational learning under imperfect information. Econom. Theory 26(3) 677-699). The experiments are designed so that both pieces of information--action and advice--are equally informative (in fact, identical) in equilibrium. Despite the informational equivalence of advice and actions, we find that subjects in a laboratory social-learning situation appear to be more willing to follow the advice given to them by their predecessor than to copy their action, and that the presence of advice increases subjects' welfare.

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File URL: http://dx.doi.org/10.1287/mnsc.1100.1228
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 56 (2010)
Issue (Month): 10 (October)
Pages: 1687-1701

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Handle: RePEc:inm:ormnsc:v:56:y:2010:i:10:p:1687-1701

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Related research

Keywords: experiment; naïve advice; social learning; word-of-mouth learning;

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References

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  1. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Scholarly Articles 3196332, Harvard University Department of Economics.
  2. Yaw Nyarko & Andrew Schotter & Barry Sopher, 2006. "On the informational content of advice: a theoretical and experimental study," Economic Theory, Springer, vol. 29(2), pages 433-452, October.
  3. Jacob K. Goeree & Thomas R. Palfrey & Brian W. Rogers & Richard D. McKelvey, 2007. "Self-Correcting Information Cascades," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 733-762.
  4. Merlo, Antonio & Schotter, Andrew, 2003. "Learning by not doing: an experimental investigation of observational learning," Games and Economic Behavior, Elsevier, vol. 42(1), pages 116-136, January.
  5. Fudenberg, Drew & Ellison, Glenn, 1995. "Word-of-Mouth Communication and Social Learning," Scholarly Articles 3196300, Harvard University Department of Economics.
  6. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
  7. Celen, Bogachan & Kariv, Shachar, 2004. "Observational learning under imperfect information," Games and Economic Behavior, Elsevier, vol. 47(1), pages 72-86, April.
  8. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  9. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
  10. Boğaçhan Çelen & Shachar Kariv, 2005. "An experimental test of observational learning under imperfect information," Economic Theory, Springer, vol. 26(3), pages 677-699, October.
  11. Angela A. Hung & Charles R. Plott, 2001. "Information Cascades: Replication and an Extension to Majority Rule and Conformity-Rewarding Institutions," American Economic Review, American Economic Association, vol. 91(5), pages 1508-1520, December.
  12. Andrew Schotter & Barry Sopher, 2006. "Trust and trustworthiness in games: An experimental study of intergenerational advice," Experimental Economics, Springer, vol. 9(2), pages 123-145, June.
  13. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  14. Bogaçhan Çelen & Shachar Kariv, 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory," American Economic Review, American Economic Association, vol. 94(3), pages 484-498, June.
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Citations

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Cited by:
  1. Jacob K. Goeree & Thomas R. Palfrey & Brian W. Rogers & Richard D. McKelvey, 2007. "Self-Correcting Information Cascades," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 733-762.
  2. Otto H. Swank & Bauke Visser, 2010. "Decision Making and Learning in a Globalizing World," Tinbergen Institute Discussion Papers 10-034/1, Tinbergen Institute.
  3. Charness, Gary B & Cabrales, Antonio, 2008. "Optimal Contracts With Team Production And Hidden Information: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt3bb3p3t3, Department of Economics, UC Santa Barbara.
  4. Bougheas, Spiros & Nieboer, Jeroen & Sefton, Martin, 2013. "Risk-taking in social settings: Group and peer effects," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 273-283.
  5. Serra Garcia, M. & Damme, E.E.C. van & Potters, J.J.M., 2011. "Lying About What you Know or About What you do? (replaces TILEC DP 2010-016)," Discussion Paper 2011-055, Tilburg University, Tilburg Law and Economic Center.
  6. Serra Garcia, M. & Damme, E.E.C. van & Potters, J.J.M., 2011. "Lying About What you Know or About What you Do? (replaces CentER DP 2010-033)," Discussion Paper 2011-139, Tilburg University, Center for Economic Research.
  7. David Cooper & John Lightle, 2013. "The gift of advice: communication in a bilateral gift exchange game," Experimental Economics, Springer, vol. 16(4), pages 443-477, December.
  8. repec:dgr:uvatin:2011069 is not listed on IDEAS
  9. Jordi Brandts & Valeska Groenert & Christina Rott, 2012. "The Impact of Advice on Women's and Men's Selection into Competition," Working Papers 663, Barcelona Graduate School of Economics.
  10. Jordi Brandts & Valeska Groener & Christina Rott, 2012. "The impact of advice on women's and men's selection into competition," UFAE and IAE Working Papers 912.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  11. Krupka, Erin L. & Weber, Roberto A., 2007. "The Focusing and Informational Effects of Norms on Pro-Social Behavior," IZA Discussion Papers 3169, Institute for the Study of Labor (IZA).
  12. Seda Ertac & Mehmet Y. Gurdal, 2013. "Preference Communication and Leadership in Group Decision-Making," Koç University-TUSIAD Economic Research Forum Working Papers 1324, Koc University-TUSIAD Economic Research Forum.

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