On the Efficiency of Social Learning

41 Pages Posted: 8 Dec 2017 Last revised: 12 Jan 2018

See all articles by Dinah Rosenberg

Dinah Rosenberg

HEC Paris - Economics & Decision Sciences

Nicolas Vieille

HEC Paris - Economics & Decision Sciences

Date Written: November 9, 2017

Abstract

We revisit well-known models of learning in which a sequence of agents make a binary decision on the basis of a private signal and additional information. We introduce efficiency measures, aimed at capturing the speed of learning in such contexts. Whatever the distribution of private signals, we show that the learning efficiency is the same, whether each agent observes the entire sequence of earlier decisions, or only the previous decision. We provide a simple necessary and sufficient condition on the signal distributions under which learning is efficient. This condition fails to hold in many prominent cases of interest. Extensions are discussed.

JEL Classification: D83, D83

Suggested Citation

Rosenberg, Dinah and Vieille, Nicolas, On the Efficiency of Social Learning (November 9, 2017). HEC Paris Research Paper No. ECO/SCD-2017-1246. Available at SSRN: https://ssrn.com/abstract=3081876 or http://dx.doi.org/10.2139/ssrn.3081876

Dinah Rosenberg

HEC Paris - Economics & Decision Sciences ( email )

Paris
France

Nicolas Vieille (Contact Author)

HEC Paris - Economics & Decision Sciences ( email )

Paris
France

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