Social Learning about Consumption
AbstractThis paper applies a social learning model to the optimal consumption rule of Allen & Carroll (2001), and delivers convincing convergence dynamics towards the optimal rule. These findings constitute a significant improvement regarding previous results in the literature, both in terms of speed of convergence and parsimony of the learning model. The learning model exhibits several appealing features: it is frugal, easy to apply to a range of learning objectives, requires few procedures and little information. Particular care is given to behavioural interpretation of the modelling assumptions in light of evidence from the fields of psychology and social science. Our results highlight the need to depart from the genetic metaphor, and account for intentional decision-making, based on agents’ relative performances. By contrast, we show that convergence is strongly hindered by exact imitation processes, or random exploration mechanisms, which are usually assumed when modelling social learning behaviour. Our results suggest a method for modelling bounded rationality, which could be tested most interestingly within the framework of a wide range of economic models with adaptive dynamics.
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Bibliographic InfoPaper provided by Groupe de REcherche en Droit, Économie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2013-18.
Length: 37 pages
Date of creation: May 2013
Date of revision: Sep 2013
learning; bounded rationality; evolutionary algorithms; consumption rule;
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-15 (All new papers)
- NEP-CBE-2013-07-15 (Cognitive & Behavioural Economics)
- NEP-CMP-2013-07-15 (Computational Economics)
- NEP-EVO-2013-07-15 (Evolutionary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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