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An Experimental Test of Advice and Social Learning

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  • Boðaçhan Çelen
  • Shachar Kariv
  • Andrew Schotter

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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Bibliographic Info

Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 784828000000000272.

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Date of creation: 27 Mar 2006
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Handle: RePEc:cla:levrem:784828000000000272

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  1. Smith, L. & Sorensen, P., 1996. "Pathological Outcomes of Observational Learning," Economics Papers 115, Economics Group, Nuffield College, University of Oxford.
  2. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(4), pages 612-43, August.
  3. Ellison, Glenn & Fudenberg, Drew, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(1), pages 93-125, February.
  4. Yaw Nyarko & Andrew Schotter & Barry Sopher, 2006. "On the informational content of advice: a theoretical and experimental study," Economic Theory, Springer, Springer, vol. 29(2), pages 433-452, October.
  5. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, Econometric Society, vol. 50(6), pages 1431-51, November.
  6. Andrew Schotter & Barry Sopher, 2006. "Trust and trustworthiness in games: An experimental study of intergenerational advice," Experimental Economics, Springer, Springer, vol. 9(2), pages 123-145, June.
  7. Boğaçhan Çelen & Shachar Kariv, 2005. "An experimental test of observational learning under imperfect information," Economic Theory, Springer, Springer, vol. 26(3), pages 677-699, October.
  8. Jacob Goeree & Thomas Palfrey & Brian Rogers, 2004. "Self-Correcting Information Cascades," Levine's Bibliography 122247000000000153, UCLA Department of Economics.
  9. Merlo, A. & Schotter, A., 2001. "Learning By Not Doing: An Experimental Investigation of Observational Learning," Working Papers, C.V. Starr Center for Applied Economics, New York University 01-09, C.V. Starr Center for Applied Economics, New York University.
  10. 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, American Economic Association, vol. 91(5), pages 1508-1520, December.
  11. Celen, Bogachan & Kariv, Shachar, 2004. "Observational learning under imperfect information," Games and Economic Behavior, Elsevier, Elsevier, vol. 47(1), pages 72-86, April.
  12. 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.
  13. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, American Economic Association, vol. 87(5), pages 847-62, December.
  14. Bogaçhan Çelen & Shachar Kariv, 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory," American Economic Review, American Economic Association, American Economic Association, vol. 94(3), pages 484-498, June.
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Cited by:
  1. Seda Ertac & Mehmet Y. Gurdal, 2013. "Preference Communication and Leadership in Group Decision-Making," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 1324, Koc University-TUSIAD Economic Research Forum.
  2. Jacob Goeree & Thomas Palfrey & Brian Rogers, 2004. "Self-Correcting Information Cascades," Levine's Bibliography 122247000000000153, UCLA Department of Economics.
  3. David Cooper & John Lightle, 2013. "The gift of advice: communication in a bilateral gift exchange game," Experimental Economics, Springer, Springer, vol. 16(4), pages 443-477, December.
  4. 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.
  5. Bougheas, Spiros & Nieboer, Jeroen & Sefton, Martin, 2013. "Risk-taking in social settings: Group and peer effects," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 92(C), pages 273-283.
  6. Krupka, Erin & Weber, Roberto A., 2009. "The focusing and informational effects of norms on pro-social behavior," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(3), pages 307-320, June.
  7. 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, Tilburg University, Tilburg Law and Economic Center 2011-055, Tilburg University, Tilburg Law and Economic Center.
  8. Thomas de Haan & Theo Offerman & Randolph Sloof, 2011. "Money talks? An Experimental Investigation of Cheap Talk and Burned Money," Tinbergen Institute Discussion Papers 11-069/1, Tinbergen Institute.
  9. 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, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 912.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  10. Otto H. Swank & Bauke Visser, 2010. "Decision Making and Learning in a Globalizing World," Tinbergen Institute Discussion Papers 10-034/1, Tinbergen Institute.
  11. 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, Tilburg University, Center for Economic Research 2011-139, Tilburg University, Center for Economic Research.
  12. 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.

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