Goeree, Jacob K. and Palfrey, Thomas R. and Rogers, Brian W. (2003) Social Learning with Private and Common Values. Social Science Working Paper, 1187. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20171102-150824856
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Abstract
We consider an environment where individuals sequentially choose among several actions. The payoff to an individual depends on her action choice, the state of the world, and an idiosyncratic, privately observed preference shock. Under weak conditions, as the number of individuals increases, the sequence of choices always reveals the state of the world. This contrasts with the familiar result for pure common-value environments where the state is never learned, resulting in herds or informational cascades. The medium run dynamics to convergence can be very complex and non-monotone: posterior beliefs may be concentrated on a wrong state for a long time, shifting suddenly to the correct state.
| Item Type: | Report or Paper (Working Paper) | ||||||||
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| Additional Information: | Financial support from the National Science Foundation NSF (SBR-0098400 and SES-0079301) and the Alfred P. Sloan Foundation is gratefully acknowledged. We thank Richard McKelvey posthumously for insights and conjectures about information aggregation that helped shape our thinking about the problem. We also acknowledge helpful comments from Kim Border, Tilman BÄorgers, Bogachen Celen, Luis Corchon, Matthew Jackson and seminar participants at University College London, UCLA, NYU, The University of Arizona, Universitat Autonoma de Barcelona, University of Edinburgh, 2003 annual meeting of ESA in Pittsburgh, the 2003 Malaga Workshop on Social Choice and Welfare Economics, the 2003 SAET meetings in Rhodos, and the 2003 ESSET meetings in Gerzensee. Published as Goeree, Jacob K. and Palfrey, Thomas R. and Rogers, Brian W. (2006) Social learning with private and common values. Economic Theory, 28 (2). pp. 254-264. | ||||||||
| Group: | Social Science Working Papers | ||||||||
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| Subject Keywords: | social learning, information cascades, herd behavior | ||||||||
| Series Name: | Social Science Working Paper | ||||||||
| Issue or Number: | 1187 | ||||||||
| Classification Code: | JEL: D82, D83 | ||||||||
| Record Number: | CaltechAUTHORS:20171102-150824856 | ||||||||
| Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20171102-150824856 | ||||||||
| Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | ||||||||
| ID Code: | 82913 | ||||||||
| Collection: | CaltechAUTHORS | ||||||||
| Deposited By: | Jacquelyn Bussone | ||||||||
| Deposited On: | 03 Nov 2017 17:36 | ||||||||
| Last Modified: | 03 Oct 2019 19:00 |
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