Economics Seminar: Social Learning with Coarse Inference

When?

Wednesday 28 November 2012, 16:00 to 17:30

Where?

40 AD 00

Open to:

Public, Staff, Students, Alumni

Speaker:

Prof. Atonio Guarino - UCL

Prof. Antonio Guarino (University College London )

"Social Learning with Coarse Inference" (with Philippe Jehiel)

Abstract

We study social learning by boundedly rational agents. Agents take a decision in sequence, after observing their predecessors and a private signal. They are unable to make perfect inferences from their predeces- sors’ decisions: they only understand the relation between the aggregate distribution of actions and the state of nature and make their inferences accordingly. We show that, in a discrete action space, even if agents receive signals of unbounded precision, convergence to the truth does not occur. In a continuous action space, compared to the rational case, agents overweight early signals. Despite this behavioral bias, conver- gence to the truth eventually obtains.