Non-Bayesian Social Learning, Second Version

25 Pages Posted: 11 Feb 2010

See all articles by Ali Jadbabaie

Ali Jadbabaie

Institute for Data, Systems, and Society, Massachusetts Institute of Technology

Alvaro Sandroni

University of Pennsylvania - Department of Economics; Northwestern University - Kellogg School of Management

Alireza Tahbaz-Salehi

Northwestern University - Kellogg School of Management; Centre for Economic Policy Research (CEPR)

Date Written: February 10, 2010

Abstract

We develop a dynamic model of opinion formation in social networks. Relevant information is spread throughout the network in such a way that no agent has enough data to learn a payoff-relevant parameter. Individuals engage in communication with their neighbors in order to learn from their experiences. However, instead of incorporating the views of their neighbors in a fully Bayesian manner, agents use a simple updating rule which linearly combines their personal experience and the views of their neighbors (even though the neighbors’ views may be quite inaccurate). This non-Bayesian learning rule is motivated by the formidable complexity required to fully implement Bayesian updating in networks. We show that, under mild assumptions, repeated interactions lead agents to successfully aggregate information and to learn the true underlying state of the world. This result holds in spite of the apparent naıvite of agents’ updating rule, the agents’ need for information from sources (i.e., other agents) the existence of which they may not be aware of, the possibility that the most persuasive agents in the network are precisely those least informed and with worst prior views, and the assumption that no agent can tell whether their own views or their neighbors’ views are more accurate.

Keywords: Social Networks, Learning, Information Aggregation

JEL Classification: D83, L14

Suggested Citation

Jadbabaie, Ali and Sandroni, Alvaro and Tahbaz-Salehi, Alireza, Non-Bayesian Social Learning, Second Version (February 10, 2010). PIER Working Paper No. 10-005, Available at SSRN: https://ssrn.com/abstract=1550809 or http://dx.doi.org/10.2139/ssrn.1550809

Ali Jadbabaie

Institute for Data, Systems, and Society, Massachusetts Institute of Technology ( email )

77 Massachusetts Ave E18-309C
E18-309C
02139, MA MA 02139
United States
6172537339 (Phone)
6172537339 (Fax)

HOME PAGE: http://web.mit.edu/www/jadbabai

Alvaro Sandroni (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5461 (Phone)
847-467-1220 (Fax)

Alireza Tahbaz-Salehi

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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