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Imitation and Luck: An Experimental Study on Social Sampling

Author

Listed:
  • Theo Offerman

    (University of Amsterdam)

  • Andrew Schotter

    (New York University)

Abstract

In this paper, we present the results of two experiments on social sampling. In both experiments, people are asked to make a risky decision in a situation where an idiosyncratic luck term a?ects their performance. Before they make their decision, people have the opportunity to sample others who have done exactly the same problem before them. These previous participants are ranked on the basis of their success. In the first experiment, we find that, by and large, subjects sample and imitate lucky risk seekers, while they could have sampled others to retrieve information that is valuable to solve their problem rationally. The simple behavioral rule of imitating the best appears to be robust to the setting of the problem. In the second experiment, we find that subjects tend to imitate successful others in both the winner's curse version and the loser's curse version of the Bazerman-Samuelson takeover game. Because of the way these problems are constructed, imitation exacerbates the winner's curse while it alleviates the loser's curse. In all problems, social sampling makes people look more risk seeking than the people who do not have the opportunity to sample.

Suggested Citation

  • Theo Offerman & Andrew Schotter, 2007. "Imitation and Luck: An Experimental Study on Social Sampling," Working Papers 0020, New York University, Center for Experimental Social Science.
  • Handle: RePEc:cso:wpaper:0020
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jonas Hedlund & Carlos Oyarzun, 2018. "Imitation in heterogeneous populations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 937-973, June.
    2. Gortner, Paul J. & van der Weele, Joël J., 2019. "Peer effects and risk sharing in experimental asset markets," European Economic Review, Elsevier, vol. 116(C), pages 129-147.
    3. Fosco, Constanza & Mengel, Friederike, 2011. "Cooperation through imitation and exclusion in networks," Journal of Economic Dynamics and Control, Elsevier, vol. 35(5), pages 641-658, May.
    4. Silvia Bou & Jordi Brandts & Magda Cayón & Pablo Guillén, 2016. "The price of luck: paying for the hot hand of others," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 2(1), pages 60-72, May.
    5. Eisenkopf, Gerald & Friehe, Tim, 2014. "Stop watching and start listening! The impact of coaching and peer observation in tournaments," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 56-70.
    6. Gary Charness & Thomas Garcia & Theo Offerman & Marie Claire Villeval, 2020. "Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory?," Journal of Risk and Uncertainty, Springer, vol. 60(2), pages 99-123, April.
    7. Duffy, John & Kornienko, Tatiana, 2010. "Does competition affect giving?," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 82-103, May.
    8. Bennett, Daniel & Chiang, Chun-Fang & Malani, Anup, 2015. "Learning during a crisis: The SARS epidemic in Taiwan," Journal of Development Economics, Elsevier, vol. 112(C), pages 1-18.
    9. Sergio Sousa, 2010. "Are smarter people really less risk averse?," Discussion Papers 2010-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    10. Boyer, Tristan & Jonard, Nicolas, 2014. "Imitation and efficient contagion," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 20-32.
    11. Innocenti, Stefania & Cowan, Robin, 2019. "Self-efficacy beliefs and imitation: A two-armed bandit experiment," European Economic Review, Elsevier, vol. 113(C), pages 156-172.
    12. Sergio Sousa, 2010. "Are smarter people really less risk averse?," Discussion Papers 2010-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    13. Paul Gortner & Joël van der Weele, "undated". "Peer Effects and Risk Sharing in Experimental Asset Markets," Tinbergen Institute Discussion Papers 19-027/I, Tinbergen Institute.
    14. Jose Apesteguia & Steffen Huck & Jörg Oechssler & Elke Weidenholzer & Simon Weidenholzer, 2018. "Imitation of Peers in Children and Adults," Games, MDPI, vol. 9(1), pages 1-15, March.
    15. Alós-Ferrer, Carlos & Ritschel, Alexander, 2021. "Multiple behavioral rules in Cournot oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 250-267.
    16. Jose Apesteguia & Jörg Oechssler & Simon Weidenholzer, 2020. "Copy Trading," Management Science, INFORMS, vol. 66(12), pages 5608-5622, December.
      • Apesteguia, Jose & Oechssler, Jörg & Weidenholzer, Simon, 2018. "Copy Trading," Working Papers 0649, University of Heidelberg, Department of Economics.
      • Jose Apesteguia & Jörg Oechssler & Simon Weidenholzer, 2018. "Copy trading," Economics Working Papers 1615, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2019.
      • Jose Apesteguia & Jörg Oechssler & Simon Weidenholzer, 2018. "Copy Trading," Working Papers 1048, Barcelona School of Economics.
    17. repec:ipg:wpaper:2014-052 is not listed on IDEAS
    18. Van Parys, Jessica & Ash, Elliott, 2018. "Sequential decision-making with group identity," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 1-18.
    19. repec:pit:wpaper:275 is not listed on IDEAS
    20. Indrani Saran & Günther Fink & Margaret McConnell, 2018. "How does anonymous online peer communication affect prevention behavior? Evidence from a laboratory experiment," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-16, November.
    21. Tristan Boyer & Nicolas Jonard, 2014. "Imitation and Efficient Contagion," Working Papers 2014-52, Department of Research, Ipag Business School.
    22. Boğaçhan Çelen & Erkut Özbay, 2012. "Introduction to a festschrift for Andrew Schotter," Review of Economic Design, Springer;Society for Economic Design, vol. 16(2), pages 89-91, September.
    23. repec:zbw:espost:178631 is not listed on IDEAS
    24. Dannenberg, Astrid & Diekert, Florian & Händel, Philipp, 2022. "The effects of social information and luck on risk behavior of small-scale fishers at Lake Victoria," Journal of Economic Psychology, Elsevier, vol. 90(C).
    25. Erik Mohlin & Robert Ostling & Joseph Tao-yi Wang, 2014. "Learning by Imitation in Games: Theory, Field, and Laboratory," Economics Series Working Papers 734, University of Oxford, Department of Economics.

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    More about this item

    Keywords

    Imitation; Social Learning;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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