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Social Learning and the Vanishing Value of Private Information

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Abstract

This paper considers a sequential social learning game with a general utility function, state and action space. We establish that the value of private information converges to zero almost surely in every Perfect Bayesian equilibrium of any sequential social learning game. We use this result to show that totally unbounded signals are necessary and sufficient for asymptotic learning to hold in every sequential social learning game. Finally, we assume that the utility function of each agent is a private random draw and establish robustness of our results.

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  • Mueller-Frank, Manuel & Arieliy, Itai, 2015. "Social Learning and the Vanishing Value of Private Information," IESE Research Papers D/1119, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-1119
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    File URL: http://www.iese.edu/research/pdfs/WP-1119-E.pdf
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    1. Philippe Aghion & Patrick Bolton & Christopher Harris & Bruno Jullien, 1991. "Optimal Learning by Experimentation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 621-654.
    2. Itai Arieli & Manuel Mueller-Frank, 2019. "Multidimensional Social Learning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(3), pages 913-940.
    3. Rosenberg, Dinah & Solan, Eilon & Vieille, Nicolas, 2009. "Informational externalities and emergence of consensus," Games and Economic Behavior, Elsevier, vol. 66(2), pages 979-994, July.
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    7. Manuel Mueller-Frank & Mallesh M. Pai, 2016. "Social Learning with Costly Search," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 83-109, February.
    8. Benjamin Golub & Matthew O. Jackson, 2012. "How Homophily Affects the Speed of Learning and Best-Response Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1287-1338.
    9. Anderson, Lisa R & Holt, Charles A, 1997. "Information Cascades in the Laboratory," American Economic Review, American Economic Association, vol. 87(5), pages 847-862, December.
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    12. Ilan Lobel & Evan Sadler, 2013. "Preferences, Homophily, and Social Learning," Working Papers 13-01, NET Institute.
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    Cited by:

    1. Davide Crapis & Bar Ifrach & Costis Maglaras & Marco Scarsini, 2017. "Monopoly Pricing in the Presence of Social Learning," Management Science, INFORMS, vol. 63(11), pages 3586-3608, November.
    2. Arieli, Itai, 2017. "Payoff externalities and social learning," Games and Economic Behavior, Elsevier, vol. 104(C), pages 392-410.

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