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Social Learning in a Changing World

Author

Listed:
  • Giuseppe Moscarin
  • Marco Ottaviani
  • Lones Smith

Abstract

In the social learning model of Banerjee [1] and Bikhchandani, Hirshleifer and Welch [2] individuals take actions sequentially after observing the history of actions taken by the predecessors and an informative private signal. If the state of the world is changing stochastically over time during the learning process, only temporary informational cascades situations where socially valuable information is wasted can arise. Furthermore, no cascade ever arises when the environment changes in a su¢ciently unpredictable way.

Suggested Citation

  • Giuseppe Moscarin & Marco Ottaviani & Lones Smith, "undated". "Social Learning in a Changing World," ELSE working papers 010, ESRC Centre on Economics Learning and Social Evolution.
  • Handle: RePEc:els:esrcls:010
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    References listed on IDEAS

    as
    1. Godfrey Keller & Sven Rady, 1999. "Optimal Experimentation in a Changing Environment," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 475-507.
    2. Marco Ottaviani & Giuseppe Moscarini & Lones Smith, 1998. "Social learning in a changing world," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 657-665.
    3. Rustichini, Aldo & Wolinsky, Asher, 1995. "Learning about variable demand in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 19(5-7), pages 1283-1292.
    4. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
    5. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
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    Citations

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    Cited by:

    1. Klumpp, Tilman, 2006. "Linear learning in changing environments," Journal of Economic Dynamics and Control, Elsevier, vol. 30(12), pages 2577-2611, December.
    2. Squintani, Francesco & Valimaki, Juuso, 2002. "Imitation and Experimentation in Changing Contests," Journal of Economic Theory, Elsevier, vol. 104(2), pages 376-404, June.
    3. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2012. "Communication and Learning," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 419-450.
    4. Subir Bose & Gerhard Orosel & Marco Ottaviani & Lise Vesterlund, 2006. "Dynamic monopoly pricing and herding," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 910-928, December.
    5. Acemoglu, Daron & Bimpikis, Kostas & Ozdaglar, Asuman, 2014. "Dynamics of information exchange in endogenous social networks," Theoretical Economics, Econometric Society, vol. 9(1), January.
    6. Dominic Rohner & Anna Winestein & Bruno S. Frey, 2006. "Ich Bin Auch ein Lemming: Herding and Consumption Capital in Arts and Culture," IEW - Working Papers 270, Institute for Empirical Research in Economics - University of Zurich.
    7. David Hirshleifer & Ivo Welch, 2002. "An Economic Approach to the Psychology of Change: Amnesia, Inertia, and Impulsiveness," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 379-421, September.
    8. Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    9. Bohren, J. Aislinn, 2016. "Informational herding with model misspecification," Journal of Economic Theory, Elsevier, vol. 163(C), pages 222-247.
    10. Naghavi, Alireza & Pignataro, Giuseppe, 2015. "Theocracy and resilience against economic sanctions," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 1-12.
    11. Hirshleifer, David & Teoh, Siew Hong, 2008. "Thought and Behavior Contagion in Capital Markets," MPRA Paper 9164, University Library of Munich, Germany.
    12. Luca Anderlini & Dino Gerardi & Roger Lagunoff, 2007. "Social Memory and Evidence from the Past," Levine's Bibliography 321307000000000850, UCLA Department of Economics.
    13. Marco Ottaviani & Giuseppe Moscarini & Lones Smith, 1998. "Social learning in a changing world," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 657-665.
    14. Warren, Patrick L. & Wilkening, Tom S., 2012. "Regulatory fog: The role of information in regulatory persistence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 840-856.
    15. Francesco Squintani & Juuso Valimaki, 1999. "Imitation and Experimentation in a Changing Environment," Discussion Papers 1275, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    16. Celen, Bogachan & Hyndman, Kyle, 2006. "Endogenous Network Formation In the Laboratory," MPRA Paper 1440, University Library of Munich, Germany.
    17. David Hirshleifer & Siew Hong Teoh, 2003. "Herd Behaviour and Cascading in Capital Markets: a Review and Synthesis," European Financial Management, European Financial Management Association, vol. 9(1), pages 25-66.
    18. Subir Bose & Gerhard Orosel & Marco Ottaviani & Lise Vesterlund, 2008. "Monopoly pricing in the binary herding model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 203-241, November.
    19. Ting Liu & Pasquale Schiraldi, 2012. "New product launch: herd seeking or herd preventing?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(3), pages 627-648, November.
    20. Marcel Boyer & Séverine Clamens, 1997. "Strategic Adoption of a New Technology under Uncertain Implementation," CIRANO Working Papers 97s-40, CIRANO.
    21. Shachar Kariv, 2005. "Overconfidence and Informational Cascades," Levine's Bibliography 122247000000000406, UCLA Department of Economics.

    More about this item

    JEL classification:

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

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