44 Pages Posted: 24 Dec 2014 Last revised: 11 Feb 2017
Date Written: December 22, 2014
Abstract. We study how effectively a group of rational agents learns from repeatedly observing each others' actions. We find that, in the long-run, observing discrete actions of others is significantly less informative than observing their private information: only a fraction of the private information is transmitted. We study how this fraction depends on the distribution of private signals.
Abstract. In a large society, where everyone's actions are public, this fraction tends to zero, i.e., only a vanishingly small share of the information is aggregated. We identify groupthink as the cause of this failure of information aggregation: As the number of agents grows, the actions of each individual depend more and more on the past actions of others, thus revealing less private information.
Keywords: Bayesian learning
JEL Classification: C73, D82, D83
Suggested Citation: Suggested Citation
Harel, Matan and Mossel, Elchanan and Strack, Philipp and Tamuz, Omer, The Speed of Social Learning (December 22, 2014). Available at SSRN: https://ssrn.com/abstract=2541707 or http://dx.doi.org/10.2139/ssrn.2541707
By Chong Huang