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Rules of Thumb for Social Learning

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  • Ellison, Glenn
  • Fudenberg, Drew

Abstract

This paper studies agents who consider the experiences of their neighbors in deciding which of two technologies to use. The authors analyze two learning environments, one in which the same technology is optimal for all players and another in which each technology is better for some of them. In both environments, players use exogenously specified rules of thumb that ignore historical data but may incorporate a tendency to use the more popular technology. In some cases, these naive rules can lead to fairly efficient decisions in the long run but adjustment can be slow when a superior technology is first introduced. Copyright 1993 by University of Chicago Press.

Suggested Citation

  • 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.
  • Handle: RePEc:ucp:jpolec:v:101:y:1993:i:4:p:612-43
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    1. 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.
    2. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
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