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Non-Bayesian social learning

Listed author(s):
  • Jadbabaie, Ali
  • Molavi, Pooya
  • Sandroni, Alvaro
  • Tahbaz-Salehi, Alireza

We develop a dynamic model of opinion formation in social networks when the information required for learning a parameter may not be at the disposal of any single agent. Individuals engage in communication with their neighbors in order to learn from their experiences. However, instead of incorporating the views of their neighbors in a fully Bayesian manner, agents use a simple updating rule which linearly combines their personal experience and the views of their neighbors. We show that, as long as individuals take their personal signals into account in a Bayesian way, repeated interactions lead them to successfully aggregate information and learn the true parameter. This result holds in spite of the apparent naïveté of agentsʼ updating rule, the agentsʼ need for information from sources the existence of which they may not be aware of, worst prior views, and the assumption that no agent can tell whether her own views or those of her neighbors are more accurate.

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File URL: http://www.sciencedirect.com/science/article/pii/S0899825612000851
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 76 (2012)
Issue (Month): 1 ()
Pages: 210-225

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Handle: RePEc:eee:gamebe:v:76:y:2012:i:1:p:210-225
DOI: 10.1016/j.geb.2012.06.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. Epstein, Larry G. & Noor, Jawwad & Sandroni, Alvaro, 2008. "Non-Bayesian updating: A theoretical framework," Theoretical Economics, Econometric Society, vol. 3(2), June.
  2. Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, vol. 45(2), pages 329-346, November.
  3. Glenn Ellison & Drew Fudenberg, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 93-125.
  4. Rosenberg, Dinah & Solan, Eilon & Vieille, Nicolas, 2009. "Informational externalities and emergence of consensus," Games and Economic Behavior, Elsevier, vol. 66(2), pages 979-994, July.
  5. Kalai, Ehud & Lehrer, Ehud, 1994. "Weak and strong merging of opinions," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 73-86, January.
  6. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-643, August.
  7. Daron Acemoglu & Munther A. Dahleh & Ilan Lobel & Asuman Ozdaglar, 2011. "Bayesian Learning in Social Networks," Review of Economic Studies, Oxford University Press, vol. 78(4), pages 1201-1236.
  8. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  9. Banerjee, Abhijit & Fudenberg, Drew, 2004. "Word-of-mouth learning," Games and Economic Behavior, Elsevier, vol. 46(1), pages 1-22, January.
  10. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion Bias, Social Influence, and Unidimensional Opinions," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 909-968.
  11. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
  12. Venkatesh Bala & Sanjeev Goyal, 1998. "Learning from Neighbours," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 595-621.
  13. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
  14. Acemoglu, Daron & Ozdaglar, Asuman & ParandehGheibi, Ali, 2010. "Spread of (mis)information in social networks," Games and Economic Behavior, Elsevier, vol. 70(2), pages 194-227, November.
  15. Ali Jadbabaie & Alvaro Sandroni & Alireza Tahbaz-Salehi, 2010. "Non-Bayesian Social Learning, Second Version," PIER Working Paper Archive 10-005, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Feb 2010.
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