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An Experiment on Social Mislearning

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  • Eyster, Erik
  • Rabin, Matthew
  • Weizsäcker, Georg

Abstract

We investigate experimentally whether social learners appreciate the redundancy of information conveyed by their observed predecessors' actions. Each participant observes a private signal and enters an estimate of the sum of all earlier-moving participants' signals plus her own. In a first treatment, participants move single-file and observe all predecessors' entries; Bayesian Nash Equilibrium (BNE) predicts that each participant simply add her signal to her immediate predecessor's entry. Although 75% of participants do so, redundancy neglect by the other 25% generates excess imitation and mild inefficiencies. In a second treatment, participants move four per period; BNE predicts that most players anti-imitate some observed entries. Such anti-imitation occurs in 35% of the most transparent cases, and 16% overall. The remaining redundancy neglect creates dramatic excess imitation and inefficiencies: late-period entries are far too extreme, and on average participants would earn substantially more by ignoring their predecessors altogether.

Suggested Citation

  • Eyster, Erik & Rabin, Matthew & Weizsäcker, Georg, 2015. "An Experiment on Social Mislearning," CEPR Discussion Papers 11020, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11020
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    References listed on IDEAS

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    1. Boğaçhan Çelen & Shachar Kariv, 2005. "An experimental test of observational learning under imperfect information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(3), pages 677-699, October.
    2. Enke, Benjamin & Zimmermann, Florian, 2013. "Correlation Neglect in Belief Formation," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79900, Verein für Socialpolitik / German Economic Association.
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    5. Stahl, Dale II & Wilson, Paul W., 1994. "Experimental evidence on players' models of other players," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 309-327, December.
    6. Christopher Avery & John H. Kagel, 1997. "Second-Price Auctions with Asymmetric Payoffs: An Experimental Investigation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 573-603, September.
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    Cited by:

    1. Krishna Dasaratha & Kevin He, 2017. "Network Structure and Naive Sequential Learning," Papers 1703.02105, arXiv.org, revised Jul 2018.
    2. Nicolas Astier, 2018. "Comparative Feedbacks under Incomplete Information," Post-Print hal-01465189, HAL.
    3. repec:eee:resene:v:54:y:2018:i:c:p:90-108 is not listed on IDEAS
    4. Nicolas Astier, 2016. "Comparative Feedbacks under Incomplete Information," Working Papers hal-01465189, HAL.

    More about this item

    Keywords

    experiments; higher-order beliefs; redundancy neglect; social learning;

    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other

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