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Communication and Learning

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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. Classification-JEL Codes: C70, C72, C73, D80, D83

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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number gueconwpa~08-08-01.

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Date of creation: 01 Aug 2008
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Handle: RePEc:geo:guwopa:gueconwpa~08-08-01

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Postal: Georgetown University Department of Economics Washington, DC 20057-1036
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Postal: Marcia Suss Administrative Officer Georgetown University Department of Economics Washington, DC 20057-1036
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Keywords: Communication; Learning; Dynamic Strategic Information Transmission;

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References

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  5. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2007. "Social Memory and Evidence from the Past," Levine's Bibliography 321307000000000850, UCLA Department of Economics.
  6. Roger Lagunoff, 2002. "Credible communication in dynastic government," Economics Bulletin, AccessEcon, vol. 28(4), pages A0.
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  9. Mikhail Golosov & Vasiliki Skreta & Aleh Tsyvinski & Andrea Wilson, 2011. "Dynamic Strategic Information Transmission," EIEF Working Papers Series 1110, Einaudi Institute for Economics and Finance (EIEF), revised May 2011.
  10. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
  11. Luca Anderlini & Roger Lagunoff, 2001. " Communication in Dynastic Repeated Games: `Whitewashes' and `Coverups' ," Game Theory and Information 0107001, EconWPA.
  12. Marco Ottaviani & Peter Sorensen, 1999. "Professional Advice," Game Theory and Information 9906003, EconWPA.
  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. David Spector, 2000. "Rational Debate And One-Dimensional Conflict," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 181-200, February.
  15. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  16. Gale, Douglas, 1996. "What have we learned from social learning?," European Economic Review, Elsevier, vol. 40(3-5), pages 617-628, April.
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Cited by:
  1. Büchel, Berno & Hellmann, Tim & Klößner, Stefan, 2013. "Opinion Dynamics under Conformity," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79770, Verein für Socialpolitik / German Economic Association.
  2. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2008. "A “Super” Folk Theorem for dynastic repeated games," Economic Theory, Springer, vol. 37(3), pages 357-394, December.
  3. Roger Lagunoff, 2002. "Credible Communication in Dynastic Government," Game Theory and Information 0203003, EconWPA.
  4. Mikhail Golosov, 2009. "Dynamic Strategic Information Transmission," 2009 Meeting Papers 181, Society for Economic Dynamics.
  5. 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.

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