A Theory and Experiments of Learning in Social Networks
Individuals living in society are bound together by a social network, the complex of relationships that brings them into contact with other agents. In many social and economic situations, individuals learn by observing the behavior of others in their local environment. This process is called social learning. Learning in incomplete networks, where different agents have different information sets, is especially challenging: because of the lack of common knowledge individuals must draw inferences about the actions others have observed as well as about their private information. Whether individuals can rationally process the information available in a network is ultimately an empirical question. This paper reports an experimental investigation of learning in three-person networks and uses the theoretical framework Gale and Kariv (2003) to interpret the data generated by the experiments. The family of three-person networks includes several nontrivial architectures, each of which gives rise to its own distinctive learning patterns. We find that the theory can account for the behavior observed in the laboratory in variety of networks and informational settings. To account for errors in subjectsâ€™ behavior, we adapt the model of Quantal Response Equilibrium of McKelvey and Palfrey (1995, 1998) and find that its restrictions are also confirmed. The â€˜goodness of fitâ€™ is better for the QRE model than for the game-theory model. This provides important support for the use of QRE to interpret experimental data.
|Date of creation:||29 Aug 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (831) 459-2743
Fax: (831) 459-5077
Web page: http://www.escholarship.org/repec/ucscecon/
More information through EDIRC
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.:
- 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.
- Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer, vol. 1(1), pages 9-41, June.
- Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
- Syngjoo Choi & Douglas Gale & Shachar Kariv, 2005. "Learning in Networks: An Experimental Study," Levine's Bibliography 122247000000000044, UCLA Department of Economics.
- Smith, L. & Sorensen, P., 1996.
"Pathological Outcomes of Observational Learning,"
96-19, Massachusetts Institute of Technology (MIT), Department of Economics.
- Bala, V. & Goyal, S., 1995.
"Learning from Neighbors,"
Econometric Institute Research Papers
EI 9549-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Plott, Charles & Hung, Angela, 1998.
"Information Cascades: Replication and an Extension to Majority Rule and Conformity Rewarding Institutions,"
1051, California Institute of Technology, Division of the Humanities and Social Sciences.
- Angela A. Hung & Charles R. Plott, 2001. "Information Cascades: Replication and an Extension to Majority Rule and Conformity-Rewarding Institutions," American Economic Review, American Economic Association, vol. 91(5), pages 1508-1520, December.
- Esther Duflo & Emmanuel Saez, 2002.
"The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment,"
NBER Working Papers
8885, National Bureau of Economic Research, Inc.
- Esther Duflo & Emmanuel Saez, 2003. "The Role Of Information And Social Interactions In Retirement Plan Decisions: Evidence From A Randomized Experiment," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 815-842, August.
- Bogaçhan Çelen & Shachar Kariv, 2004. "Distinguishing Informational Cascades from Herd Behavior in the Laboratory," American Economic Review, American Economic Association, vol. 94(3), pages 484-498, June.
- John Xu Zheng, 1996. "A consistent test of functional form via nonparametric estimation techniques," Journal of Econometrics, Elsevier, vol. 75(2), pages 263-289, December.
- Gale, Douglas & Kariv, Shachar, 2003. "Bayesian learning in social networks," Games and Economic Behavior, Elsevier, vol. 45(2), pages 329-346, November.
- Kosfeld Michael, 2004. "Economic Networks in the Laboratory: A Survey," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-23, March.
- Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-62, December.
- repec:cup:cbooks:9780521586115 is not listed on IDEAS
- repec:cup:cbooks:9780521355643 is not listed on IDEAS
- Dorothea K¸bler & Georg Weizs”cker, 2004. "Limited Depth of Reasoning and Failure of Cascade Formation in the Laboratory," Review of Economic Studies, Wiley Blackwell, vol. 71(2), pages 425-441, 04.
When requesting a correction, please mention this item's handle: RePEc:cdl:ucscec:qt8853k4jd. 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: (Lisa Schiff)
If references are entirely missing, you can add them using this form.