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Informational externalities and emergence of consensus

  • Rosenberg, Dinah
  • Solan, Eilon
  • Vieille, Nicolas

We study a general model of dynamic games with purely informational externalities. We prove that eventually all motives for experimentation disappear, and provide the exact rate at which experimentation decays. We also provide tight conditions under which players eventually reach a consensus. These results imply extensions of many known results in the literature of social learning and getting to agreement.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 66 (2009)
Issue (Month): 2 (July)
Pages: 979-994

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Handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:979-994
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Nielsen, Lars Tyge, et al, 1990. "Common Knowledge of an Aggregate of Expectations," Econometrica, Econometric Society, vol. 58(5), pages 1235-39, September.
  2. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion bias, social influence, and uni-dimensional opinions," LSE Research Online Documents on Economics 454, London School of Economics and Political Science, LSE Library.
  3. Fudenberg, Drew & Ellison, Glenn, 1995. "Word-of-Mouth Communication and Social Learning," Scholarly Articles 3196300, Harvard University Department of Economics.
  4. Menager, Lucie, 2006. "Consensus, communication and knowledge: An extension with Bayesian agents," Mathematical Social Sciences, Elsevier, vol. 51(3), pages 274-279, May.
  5. Patrick Bolton & Christopher Harris, 1999. "Strategic Experimentation," Econometrica, Econometric Society, vol. 67(2), pages 349-374, March.
  6. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Disappearing Private Reputations in Long-Run Relationships," PIER Working Paper Archive 04-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Dinah Rosenberg & Eilon Solan & Nicolas Vieille, 2004. "Social Learning in One-Arm Bandit Problems," Discussion Papers 1396, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. Cripps, Martin & Keller, Godfrey & Rady, Sven, 2003. "Strategic Experimentation with Exponential Bandits," Discussion Papers in Economics 4, University of Munich, Department of Economics.
  9. Parikh, Rohit & Krasucki, Paul, 1990. "Communication, consensus, and knowledge," Journal of Economic Theory, Elsevier, vol. 52(1), pages 178-189, October.
  10. Banerjee, Abhijit & Fudenberg, Drew, 2004. "Word-of-mouth learning," Games and Economic Behavior, Elsevier, vol. 46(1), pages 1-22, January.
  11. Rosenberg, Dinah & Solan, Eilon & Vieille, Nicolas, 2010. "On the optimal amount of experimentation in sequential decision problems," Statistics & Probability Letters, Elsevier, vol. 80(5-6), pages 381-385, March.
  12. Chamley,Christophe P., 2004. "Rational Herds," Cambridge Books, Cambridge University Press, number 9780521824019, June.
  13. Chamley,Christophe P., 2004. "Rational Herds," Cambridge Books, Cambridge University Press, number 9780521530927, June.
  14. Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, vol. 45(2), pages 329-346, November.
  15. Nielsen, Lars Tyge, 1984. "Common knowledge, communication, and convergence of beliefs," Mathematical Social Sciences, Elsevier, vol. 8(1), pages 1-14, August.
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