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Social Learning with Coarse Inference

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  • Antonio Guarino
  • Philippe Jehiel

Abstract

We study social learning by boundedly rational agents. Agents take a decision in sequence, after observing their predecessors and a private signal. They are unable to make perfect inferences from their predecessors' decisions: they only understand the relation between the aggregate distribution of actions and the state of nature, and make their inferences accordingly. We show that, in a discrete action space, even if agents receive signals of unbounded precision, there are asymptotic inefficiencies. In a continuous action space, compared to the rational case, agents overweight early signals. Despite this behavioral bias, eventually agents learn the realized state of the world and choose the correct action. (JEL D82, D83)

Suggested Citation

  • Antonio Guarino & Philippe Jehiel, 2013. "Social Learning with Coarse Inference," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 147-174, February.
  • Handle: RePEc:aea:aejmic:v:5:y:2013:i:1:p:147-74
    Note: DOI: 10.1257/mic.5.1.147
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:eecrev:v:94:y:2017:i:c:p:148-165 is not listed on IDEAS
    2. Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
    3. Fabrizio Germano & Francesco Sobbrio, 2016. "Opinion dynamics via search engines (and other algorithmic gatekeepers)," Economics Working Papers 1552, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2018.
    4. Antonio Guarino & Antonella Ianni, 2010. "Bayesian Social Learning with Local Interactions," Games, MDPI, Open Access Journal, vol. 1(4), pages 1-21, October.
    5. Roberta De Filippis & Antonio Guarino & Philippe Jehiel & Toru Kitagawa, 2016. "Updating ambiguous beliefs in a social learning experiment," CeMMAP working papers CWP18/16, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    6. Marco Angrisani & Antonio Guarino & Philippe Jehiel & Toru Kitagawa, 2017. "Information redundancy neglect versus overconfidence: a social learning experiment," CeMMAP working papers CWP32/17, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    7. repec:eee:ecolet:v:163:y:2018:i:c:p:79-82 is not listed on IDEAS
    8. Bohren, J. Aislinn, 2016. "Informational herding with model misspecification," Journal of Economic Theory, Elsevier, vol. 163(C), pages 222-247.
    9. James C. D. Fisher & John Wooders, 2017. "Interacting information cascades: on the movement of conventions between groups," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(1), pages 211-231, January.
    10. repec:eee:jeborg:v:136:y:2017:i:c:p:186-202 is not listed on IDEAS
    11. Monzón, Ignacio & Rapp, Michael, 2014. "Observational learning with position uncertainty," Journal of Economic Theory, Elsevier, vol. 154(C), pages 375-402.
    12. Vincent Mak & Rami Zwick, 2014. "Experimenting and learning with localized direct communication," Experimental Economics, Springer;Economic Science Association, vol. 17(2), pages 262-284, June.
    13. Erik Eyster & Matthew Rabin, 2010. "Naïve Herding in Rich-Information Settings," American Economic Journal: Microeconomics, American Economic Association, vol. 2(4), pages 221-243, November.
    14. Proto, Eugenio & Sgroi, Daniel, 2017. "Biased beliefs and imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 186-202.
    15. Guarino, Antonio & Harmgart, Heike & Huck, Steffen, 2011. "Aggregate information cascades," Games and Economic Behavior, Elsevier, vol. 73(1), pages 167-185, September.
    16. Christoph March, 2011. "Adaptive social learning," Working Papers halshs-00572528, HAL.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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