Informational Herding and Optimal Experimentation
We explore the constrained efficient observational learning model - as when individuals care about successors, or are so induced by an informationlly-constrained social planner. We find that when the herding externality is correctly internalized in this fashion, incorrect herds still obtain. To describe behaviour in this model, we exhibit a set of indices that capture the privately extimated social value of every action.
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