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Communication and Learning

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  • Anderlini, Luca

    (Georgetown U)

  • Gerardi, Dino

    (Yale U)

  • Lagunoff, Roger

    (Georgetown U)

Abstract

We study the intergenerational accumulation of knowledge in an infinite-horizon model of communication. Each in a sequence of players receives an informative but imperfect signal of the once-and-for-all realization of an unobserved state. The state affects all players' preferences over present and future decisions. Each player observes his own signal but does not directly observe the realized signals or actions of his predecessors. Instead, he must rely on cheap-talk messages from the previous players to fathom the past. Each player is therefore both a receiver of information with respect to his decision, and a sender with respect to all future decisions. Senders' preferences are misaligned with those of future decision makers. We ask whether there exist "full learning'' equilibria -- ones in which the players' posterior beliefs eventually place full weight on the true state. We show that, regardless of how small the misalignment in preferences is, such equilibria do not exist. This is so both in the case of private communication in which each player only hears the message of his immediate predecessor, and in the case of public communication, in which each player hears the message of all previous players. Surprisingly, in the latter case full learning may be impossible even in the limit as all players become infinitely patient. We also consider the case where all players have access to a mediator who can work across time periods arbitrarily far apart. In this case full learning equilibria exist.

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Bibliographic Info

Paper provided by Yale University, Department of Economics in its series Working Papers with number 37.

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Date of creation: Feb 2008
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Handle: RePEc:ecl:yaleco:37

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References

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  1. Luca Anderlini & Roger Lagunoff, 2000. "Communication in Dynastic Repeated Games: `Whitewashes' and `Coverups," Working Papers gueconwpa~01-01-03, Georgetown University, Department of Economics, revised 01 Jul 2001.
  2. David Kreps & Robert Wilson, 1998. "Sequential Equilibria," Levine's Working Paper Archive 237, David K. Levine.
  3. David Spector, 1999. "Rational debate and one-dimensional conflict," Working papers 99-09, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Roger Lagunoff, 2002. "Credible Communication in Dynastic Government," Working Papers gueconwpa~02-02-04, Georgetown University, Department of Economics.
  5. Bart Taub, 1997. "Dynamic Agency with Feedback," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 515-543, Autumn.
  6. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
  7. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  8. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796, September.
  9. Smith, L, 1996. "Social Learning in a Changing World," Working papers 96-34, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Roger Lagunoff & Akihiko Matsui, 2004. "Organizations and overlapping generations games: Memory, communication, and altruism," Review of Economic Design, Springer, vol. 8(4), pages 383-411, 04.
  11. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  12. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, vol. 54(6), pages 1375-85, November.
  13. Hajime Kobayashi, 2007. "Folk Theorems For Infinitely Repeated Games Played By Organizations With Short-Lived Members," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 517-549, 05.
  14. Marco Ottaviani & Peter Sorensen, 1999. "Professional Advice," Game Theory and Information 9906003, EconWPA.
  15. Gale, Douglas, 1996. "What have we learned from social learning?," European Economic Review, Elsevier, vol. 40(3-5), pages 617-628, April.
  16. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2007. "Social Memory and Evidence from the Past," Cowles Foundation Discussion Papers 1601, Cowles Foundation for Research in Economics, Yale University.
  17. Mikhail Golosov & Vasiliki Skreta & Aleh Tsyvinski & Andrea Wilson, 2011. "Dynamic Strategic Information Transmission," Cowles Foundation Discussion Papers 1802, Cowles Foundation for Research in Economics, Yale University, revised Jun 2011.
  18. Krishna, V. & Morgan, J., 1999. "A Model of Expertise," Papers 206, Princeton, Woodrow Wilson School - Public and International Affairs.
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Cited by:
  1. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2006. "A 'Super' Folk Theorem for Dynastic Repeated Games," Levine's Bibliography 784828000000000664, UCLA Department of Economics.
  2. Roger Lagunoff, 2002. "Credible Communication in Dynastic Government," Working Papers gueconwpa~02-02-04, Georgetown University, Department of Economics.
  3. Petri Ruuskanen & Tomi Kankainen, 2011. "Dynamic capabilities in small and medium manufacturing firms in rural Finland – role of social capital?," ERSA conference papers ersa11p806, European Regional Science Association.
  4. Mikhail Golosov & Vasiliki Skreta & Aleh Tsyvinski & Andrea Wilson, 2011. "Dynamic Strategic Information Transmission," Working Papers 11-17, New York University, Leonard N. Stern School of Business, Department of Economics.
  5. Francisco Santos & Francisco Liñán & Muhammad A. Roomi, . "A cognitive attempt to understanding female entrepreneurial potential: the role of social norms and culture," Working Paper 201008, Department of Business Economics, Universitat Autonoma de Barcelona.
  6. Mikhail Golosov & Vasiliki Skreta & Aleh Tsyvinski & Andrea Wilson, 2011. "Dynamic Strategic Information Transmission," EIEF Working Papers Series 1110, Einaudi Institute for Economic and Finance (EIEF), revised May 2011.

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