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Imitation and Luck: An Experimental Study on Social Sampling

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Author Info

  • Theo Offerman

    (University of Amsterdam)

  • Andrew Schotter

    (New York University)

Abstract

In this paper, we present the results of two experiments on social sampling. In both experiments, people are asked to make a risky decision in a situation where an idiosyncratic luck term a?ects their performance. Before they make their decision, people have the opportunity to sample others who have done exactly the same problem before them. These previous participants are ranked on the basis of their success. In the first experiment, we find that, by and large, subjects sample and imitate lucky risk seekers, while they could have sampled others to retrieve information that is valuable to solve their problem rationally. The simple behavioral rule of imitating the best appears to be robust to the setting of the problem. In the second experiment, we find that subjects tend to imitate successful others in both the winner's curse version and the loser's curse version of the Bazerman-Samuelson takeover game. Because of the way these problems are constructed, imitation exacerbates the winner's curse while it alleviates the loser's curse. In all problems, social sampling makes people look more risk seeking than the people who do not have the opportunity to sample.

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Bibliographic Info

Paper provided by New York University, Center for Experimental Social Science in its series Working Papers with number 0020.

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Length: 27 pages
Date of creation: 12 Feb 2007
Date of revision:
Handle: RePEc:cso:wpaper:0020

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Web page: http://cess.nyu.edu/
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Keywords: Imitation; Social Learning;

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References

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  1. Offerman, Theo & Sonnemans, Joep, 1998. "Learning by experience and learning by imitating successful others," Journal of Economic Behavior & Organization, Elsevier, vol. 34(4), pages 559-575, March.
  2. Jose Apesteguia & Steffen Huck & Jorg Oechssler, 2004. "Imitation - Theory and Experimental Evidence," Levine's Bibliography 122247000000000132, UCLA Department of Economics.
  3. Hofbauer, Josef & Karl H. Schlag, . "Sophisticated Imitation in Cyclic Games," Discussion Paper Serie B 427, University of Bonn, Germany, revised Mar 1998.
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  8. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, October.
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  17. Theo Offerman & Joep Sonnemans, 2004. "What's Causing Overreaction? An Experimental Investigation of Recency and the Hot-hand Effect," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 533-554, October.
  18. Reinhard Selten & Klaus Abbink & Ricarda Cox, 2001. "Learning Direction Theory and the Winner’s Curse," Bonn Econ Discussion Papers bgse10_2001, University of Bonn, Germany.
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  20. Schlag, Karl H., 1999. "Which one should I imitate?," Journal of Mathematical Economics, Elsevier, vol. 31(4), pages 493-522, May.
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Citations

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Cited by:
  1. Sergio Sousa, 2010. "Are smarter people really less risk averse?," Discussion Papers 2010-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Mengel, Friederike & Fosco, Constanza, 2007. "Cooperation through Imitation and Exclusion in Networks," MPRA Paper 5258, University Library of Munich, Germany.
  3. Boyer, Tristan & Jonard, Nicolas, 2010. "Imitation and Efficient Contagion," MPRA Paper 23430, University Library of Munich, Germany.
  4. John Duffy & Tatiana Kornienko, 2006. "Does Competition Affect Giving?," Working Papers 275, University of Pittsburgh, Department of Economics, revised Apr 2009.
  5. Gerald Eisenkopf & Tim Friehe, 2012. "Stop Watching and Start Listening! The Impact of Coaching and Peer Observation in tournaments," Working Paper Series of the Department of Economics, University of Konstanz 2012-10, Department of Economics, University of Konstanz.

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