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- Title
Social learning with private and common values.
- Authors
Goeree, Jacob K.; Palfrey, Thomas R.; Rogers, Brian W.
- 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.
- Subjects
SOCIAL learning; VALUES (Ethics); SOCIAL action; CHOICE (Psychology); STOCHASTIC convergence
- Publication
Economic Theory, 2006, Vol 28, Issue 2, p245
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-005-0642-5