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Social learning in a changing world

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Author Info
Marco Ottaviani (Department of Economics and ELSE, University College London, Gower St., London WC1E 6BT, UK)
Giuseppe Moscarini (Department of Economics, Yale University, 28 Hillhouse Avenue, New Haven, CT 06510, USA)
Lones Smith (Department of Economics, Massachusetts Institute of Technology, 50 Memorial Dr., Cambridge, MA 02139, USA)

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Abstract

In the social learning model of Banerjee [1] and Bikhchandani, Hirshleifer and Welch [2] individuals take actions sequentially after observing the history of actions taken by the predecessors and an informative private signal. If the state of the world is changing stochastically over time during the learning process, only temporary informational cascades - situations where socially valuable information is wasted - can arise. Furthermore, no cascade ever arises when the environment changes in a sufficiently unpredictable way.

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Article provided by Springer in its journal Economic Theory.

Volume (Year): 11 (1998)
Issue (Month): 3 ()
Pages: 657-665
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Handle: RePEc:spr:joecth:v:11:y:1998:i:3:p:657-665

Note: Received: December 5, 1996; revised version: February 11, 1997
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August. [Downloadable!] (restricted)
  2. Keller, Godfrey & Rady, Sven, 1999. "Optimal Experimentation in a Changing Environment," Review of Economic Studies, Blackwell Publishing, vol. 66(3), pages 475-507, July. [Downloadable!] (restricted)
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  3. Rustichini, Aldo & Wolinsky, Asher, 1995. "Learning about variable demand in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1283-1292. [Downloadable!] (restricted)
  4. Marco Ottaviani & Giuseppe Moscarini & Lones Smith, 1998. "Social learning in a changing world," Economic Theory, Springer, vol. 11(3), pages 657-665. [Downloadable!] (restricted)
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  5. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hirshleifer, David & Teoh, Siew Hong, 2008. "Thought and Behavior Contagion in Capital Markets," MPRA Paper 9164, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  2. David Hirshleifer & Ivo Welch, 2001. "An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness," Cowles Foundation Discussion Papers 1306, Cowles Foundation, Yale University. [Downloadable!]
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  3. Francesco Squintani & Juuso Valimaki, 1999. "Imitation and Experimentation in a Changing Environment," Discussion Papers 1275, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  4. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2008. "Communication and Learning," Cowles Foundation Discussion Papers 1639, Cowles Foundation, Yale University. [Downloadable!]
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  5. Dominic Rohner & Anna Winestein & Bruno S. Frey, 2006. "Ich bin auch ein Lemming: Herding and Consumption Capital in Arts and Culture," CREMA Working Paper Series 2006-05, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  6. Giuseppe Moscarin & Marco Ottaviani & Lones Smith, . "Social Learning in a Changing World," ELSE working papers 010, ESRC Centre on Economics Learning and Social Evolution. [Downloadable!]
    Other versions:
  7. Marcel Boyer & Séverine Clamens, 1997. "Strategic Adoption of a New Technology under Uncertain Implementation," CIRANO Working Papers 97s-40, CIRANO. [Downloadable!]
  8. Shachar Kariv, 2005. "Overconfidence and Informational Cascades," Levine's Bibliography 122247000000000406, UCLA Department of Economics. [Downloadable!]
  9. Celen, Bogachan & Hyndman, Kyle, 2006. "Endogenous Network Formation In the Laboratory," MPRA Paper 1440, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  10. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2007. "Social Memory and Evidence from the Past," Working Papers gueconwpa~07-07-01, Georgetown University, Department of Economics. [Downloadable!]
    Other versions:
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