A general framework for rational learning in social networks
This paper provides a formal characterization of the process of rational learning in social networks. Agents receive initial private information and select an action out of a choice set under uncertainty in each of infinitely many periods, observing the history of choices of their neighbors. Choices are made based on a common behavioral rule. Conditions under which rational learning leads to global consensus, local indifference and local disagreement are characterized. In the general setting considered, rational learning can lead to pairs of neighbors selecting different actions once learning ends, while not being indifferent among their choices. The effect of the network structure on the degree of information aggregation and speed of convergence is also considered and an answer to the question of optimal information aggregation in networks provided. The results highlight distinguishing features between properties of Bayesian and non-Bayesian learning in social networks.
References listed on IDEAS
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.:
- Smith, L. & Sorensen, P., 1996.
"Pathological Outcomes of Observational Learning,"
115, Economics Group, Nuffield College, University of Oxford.
- Munshi, Kaivan, 2004. "Social learning in a heterogeneous population: technology diffusion in the Indian Green Revolution," Journal of Development Economics, Elsevier, vol. 73(1), pages 185-213, February.
- Krasucki, Paul, 1996. "Protocols Forcing Consensus," Journal of Economic Theory, Elsevier, vol. 70(1), pages 266-272, July.
- Mark Rosenzweig & Andrew D. Foster, .
"Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture,"
_068, University of Pennsylvania.
- Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
- 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.
- Kaivan Munshi, 2003. "Networks in the Modern Economy: Mexican Migrants in the U. S. Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 118(2), pages 549-599.
- Topa, Giorgio, 1997.
"Social Interactions, Local Spillovers and Unemployment,"
97-17, C.V. Starr Center for Applied Economics, New York University.
- Giorgio Topa, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 261-295.
- Timothy Conley & Udry Christopher, 2001. "Social Learning Through Networks: The Adoption of New Agricultural Technologies in Ghana," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 668-673.
- Yannis M. Ioannides & Linda Datcher Loury, 2004.
"Job Information Networks, Neighborhood Effects, and Inequality,"
Journal of Economic Literature,
American Economic Association, vol. 42(4), pages 1056-1093, December.
- Yannis M. Ioannides & Linda Datcher Loury, 2002. "Job Information Networks, Neighborhood Effects and Inequality," Discussion Papers Series, Department of Economics, Tufts University 0217, Department of Economics, Tufts University.
- Mihai Manea, 2011. "Bargaining in Stationary Networks," American Economic Review, American Economic Association, vol. 101(5), pages 2042-80, August.
- Bacharach, Michael, 1985. "Some extensions of a claim of Aumann in an axiomatic model of knowledge," Journal of Economic Theory, Elsevier, vol. 37(1), pages 167-190, October.
- 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.
- Robert J. Aumann, 1999. "Interactive epistemology I: Knowledge," International Journal of Game Theory, Springer;Game Theory Society, vol. 28(3), pages 263-300.
- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
- 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.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Parikh, Rohit & Krasucki, Paul, 1990. "Communication, consensus, and knowledge," Journal of Economic Theory, Elsevier, vol. 52(1), pages 178-189, October.
- Michael Suk-Young Chwe, 2000. "Communication and Coordination in Social Networks," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 1-16.
- Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, vol. 45(2), pages 329-346, November.
When requesting a correction, please mention this item's handle: RePEc:the:publsh:1015. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin J. Osborne)
If references are entirely missing, you can add them using this form.