Year: 1996
Type: report
Abstract: We prove that the recently proposed informational herding models are but special cases of a standard single person experimentation model with myopia.We then re-interpret the incorrect herding outcome as a familiar failure of complete learning in an optimal experimentation problem.We next explore that experimentation model with patient individualsor equivalently, the observational learning model where individuals care about successors.As such, we find that even when individuals internalize the herding externality in this fashion, incorrect herds and incomplete learning still obtain.We note that this outcome can be implemented as a constrained social optimum when decentralized by transfers.'The proposed mapping in this paper first appeared in July 1995 as a later section in our companion paper, "Pathological Outcomes of Observational Learning."For the current full length paper, we thank Abhijit Banerjee, Christopher Wallace, and the MIT theory
Authors: Lones Smith, Peter Norman Srensen
Language: English
Topic: Game Theory and Applications
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
Funder: National Science Foundation
OpenAlex ID: W3121326555