Learning from Neighbors
When payoffs from different actions are unknown, agents use their own past experience as well as the experience of their neighbors to guide their current decision making. This paper develops a general framework to study the relationship between the structure of information flows and the process of social learning. We show that in a connected society, local learning ensures that all agents obtain the same utility, in the long run. We develop conditions under which this utility is the maximal attainable, i.e. optimal actions are adopted. This analysis identifies a structural property of information structures -- local independence -- which greatly facilitates social learning. Our analysis also suggests that there exists a negative relationship between the degree of social integration and the likelihood of diversity. Simulations of the model generate spatial and temporal patterns of adoption that are consistent with empirical work.
|Date of creation:||01 Jan 1995|
|Contact details of provider:|| Postal: Postbus 1738, 3000 DR Rotterdam|
Phone: 31 10 4081111
Web page: http://www.eur.nl/ese
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bala, Venkatesh & Goyal, Sanjeev, 1994. "The Birth of a New Market," Economic Journal, Royal Economic Society, vol. 104(423), pages 282-290, March.
- Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
- Aghion, Philippe & Espinosa, Maria Paz & Jullien, Bruno, 1993.
"Dynamic Duopoly with Learning through Market Experimentation,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 517-539, July.
- Jullien Bruno & Aghion Philippe & Paz Espinoza M, 1990. "Dynamic duopoly with learning through market experimentation," CEPREMAP Working Papers (Couverture Orange) 9012, CEPREMAP.
- Aghion, P. & Espinoza, M.P. & Jullien, B., 1990. "Dynamic Duopoly With Learning Through Market Experimentation," DELTA Working Papers 90-13, DELTA (Ecole normale supérieure).
- Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-643, August.
- Allison, G. & Fudenberg, D., 1992. "Rules of Thumb for Social Learning," Working papers 92-12, Massachusetts Institute of Technology (MIT), Department of Economics.
- G. Ellison & D. Fudenberg, 2010. "Rules of Thumb for Social Learning," Levine's Working Paper Archive 435, David K. Levine.
- Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Scholarly Articles 3196332, Harvard University Department of Economics.
- Ellison, Glenn & Fudenberg, Drew, 1992. "Rules of Thumb for Social Learning," IDEI Working Papers 17, Institut d'Économie Industrielle (IDEI), Toulouse.
- Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
- Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
- Bala, Venkatesh & Goyal, Sanjeev, 1995. "A Theory of Learning with Heterogeneous Agents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 303-323, May.
- Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ems:eureir:1362. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePub)
If references are entirely missing, you can add them using this form.