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Learning and coordination with dispersed information

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  • Berardi, Michele

Abstract

We analyse adaptive learning in a model of incomplete and dispersed information, with externalities and strategic interactions. We build on the framework proposed by Angeletos and Pavan (2007a) and extend it to a dynamic multi-period setting where agents need to learn to coordinate. We derive conditions under which adaptive learning obtains in such setting and show that, when actions are strategic substitutes, the information structure affects the speed of convergence: while more precise private information is beneficial, better public information has negative effects. We also show that adaptive learning dynamics converge to the Bayesian Nash equilibrium, which means that agents can learn to act strategically by relying only on observable (exogenous) information.

Suggested Citation

  • Berardi, Michele, 2015. "Learning and coordination with dispersed information," Journal of Economic Dynamics and Control, Elsevier, vol. 58(C), pages 19-33.
    • Handle: RePEc:eee:dyncon:v:58:y:2015:i:c:p:19-33
    DOI: 10.1016/j.jedc.2015.05.019
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    References listed on IDEAS

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    Cited by:

    1. Michele Berardi, 2018. "Information aggregation and learning in a dynamic asset pricing model," Centre for Growth and Business Cycle Research Discussion Paper Series 241, Economics, The University of Manchester.
    2. Michele Berardi, 2015. "Prices, fundamental values and learning," Centre for Growth and Business Cycle Research Discussion Paper Series 214, Economics, The University of Manchester.
    3. Michele Berardi, 2016. "Herding through learning in an asset pricing model," Centre for Growth and Business Cycle Research Discussion Paper Series 223, Economics, The University of Manchester.

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    More about this item

    Keywords

    Learning; Heterogeneity; Dispersed information; Interaction; Coordination;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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