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Stationary social learning in a changing environment

Author

Listed:
  • Levy, Raphaël

    (HEC Paris)

  • Pęski, Marcin

    (University of Toronto - Department of Economics)

  • Vieille, Nicolas

    (HEC Paris)

Abstract

We consider social learning in a changing world. With changing states, societies can remain responsive only if agents regularly act upon fresh information, which drastically limits the value of observational learning. When the state is close to persistent, a consensus whereby most agents choose the same action typically emerges. However, the consensus action is not perfectly correlated with the state, because societies exhibit inertia following state changes. Phases of inertia may be longer when signals are more precise, even if agents draw large samples of past actions, as actions then become too correlated within samples, thereby reducing informativeness and welfare.

Suggested Citation

  • Levy, Raphaël & Pęski, Marcin & Vieille, Nicolas, 2022. "Stationary social learning in a changing environment," HEC Research Papers Series 1433, HEC Paris.
    • Handle: RePEc:ebg:heccah:1433
    DOI: 10.2139/ssrn.3999770
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    Cited by:

    1. Daron Acemoglu & Asuman Ozdaglar & Sarath Pattathil, 2023. "Learning, Diversity and Adaptation in Changing Environments: The Role of Weak Links," Papers 2305.00474, arXiv.org.

    More about this item

    Keywords

    observational learning; herding;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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