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Contagion through learning

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Author Info

  • Steiner, Jakub

    ()
    (Economics, University of Edinburgh)

  • Stewart, Colin

    ()
    (Department of Economics, University of Toronto)

Abstract

We study learning in a large class of complete information normal form games. Players continually face new strategic situations and must form beliefs by extrapolation from similar past situations. We characterize the long-run outcomes of learning in terms of iterated dominance in a related incomplete information game with subjective priors. The use of extrapolations in learning may generate contagion of actions across games even if players learn only from games with payoffs very close to the current ones. Contagion may lead to unique long-run outcomes where multiplicity would occur if players learned through repeatedly playing the same game. The process of contagion through learning is formally related to contagion in global games, although the outcomes generally differ.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 3 (2008)
Issue (Month): 4 (December)
Pages:

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Handle: RePEc:the:publsh:416

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Web page: http://econtheory.org

Related research

Keywords: Similarity; learning; contagion; case-based reasoning; global games;

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References

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  8. LiCalzi Marco, 1995. "Fictitious Play by Cases," Games and Economic Behavior, Elsevier, vol. 11(1), pages 64-89, October.
  9. Eddie Dekel & Drew Fudenberg & David K. Levine, 2001. "Learning to Play Bayesian Games," Harvard Institute of Economic Research Working Papers 1926, Harvard - Institute of Economic Research.
  10. Aviad Heifetz & Chris Shannon & Yossi Spiegel, 2007. "The Dynamic Evolution of Preferences," Economic Theory, Springer, vol. 32(2), pages 251-286, August.
  11. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
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  13. Alan Beggs, 2005. "Learning in Bayesian Games with Binary Actions," Economics Series Working Papers 232, University of Oxford, Department of Economics.
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Cited by:
  1. Timothy N. Cason & Anya C. Savikhin & Roman Sheremeta, 2011. "Behavioral Spillovers in Coordination Games," Working Papers 11-20, Chapman University, Economic Science Institute.
  2. Mohlin, Erik, 2014. "Optimal categorization," Journal of Economic Theory, Elsevier, vol. 152(C), pages 356-381.
  3. Arifovic, Jasmina & Hua Jiang, Janet & Xu, Yiping, 2013. "Experimental evidence of bank runs as pure coordination failures," Journal of Economic Dynamics and Control, Elsevier, vol. 37(12), pages 2446-2465.
  4. Friederike Mengel & Emanuela Sciubba, 2010. "Extrapolation in Games of Coordination and Dominance Solvable Games," Working Papers 2010.148, Fondazione Eni Enrico Mattei.
  5. Daron Acemoglu & Matthew O. Jackson, 2011. "History, Expectations, and Leadership in the Evolution of Social Norms," NBER Working Papers 17066, National Bureau of Economic Research, Inc.
  6. Grimm, Veronika & Mengel, Friederike, 2012. "An experiment on learning in a multiple games environment," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2220-2259.
  7. Friederike Mengel, 2007. "Learning Across Games," Working Papers. Serie AD 2007-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  8. Mohlin, Erik, 2010. "Evolution of Theories of Mind," Working Paper Series in Economics and Finance 0728, Stockholm School of Economics, revised 12 May 2010.
  9. Sergei Izmalkov & Muhamet Yildiz, 2009. "Investor Sentiments," Working Papers w0138, Center for Economic and Financial Research (CEFIR).
  10. Jakub Steiner & Colin Stewart, 2012. "Price Distortions in High-Frequency Markets," Discussion Papers 1549, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
  12. Rossella Argenziano & Itzhak Gilboa, 2012. "History as a coordination device," Theory and Decision, Springer, vol. 73(4), pages 501-512, October.
  13. Wolfgang Kuhle, 2013. "A Global Game with Heterogenous Priors," Papers 1312.7860, arXiv.org.

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