Superstition and Rational Learning

43 Pages Posted: 7 Mar 2006  

Drew Fudenberg

Massachusetts Institute of Technology (MIT)

David K. Levine

Washington University in St. Louis - Department of Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Date Written: March 2006

Abstract

We argue that some but not all superstitions can persist when learning is rational and players are patient, and illustrate our argument with an example inspired by the code of Hammurabi. The code specified an appeal by surviving in the river as a way of deciding whether an accusation was true, so it seems to have relied on the superstition that the guilty are more likely to drown than the innocent. If people can be easily persuaded to hold this superstitious belief, why not the superstitious belief that the guilty will be struck dead by lightning? We argue that the former can persist but the latter cannot by giving a partial characterization of the outcomes that arise as the limit of steady states with rational learning as players become more patient. These 'subgame-confirmed Nash equilibria' have self-confirming beliefs at information sets reachable by a single deviation. According to this theory a mechanism that uses superstitions two or more steps off the equilibrium path, such as 'appeal by surviving in the river', is more likely to persist than a superstition where the false beliefs are only one step off of the equilibrium path.

Suggested Citation

Fudenberg , Drew and Levine, David K., Superstition and Rational Learning (March 2006). Harvard Institute of Economic Research Discussion Paper No. 2114. Available at SSRN: https://ssrn.com/abstract=888774 or http://dx.doi.org/10.2139/ssrn.888774

Drew Fudenberg (Contact Author)

Massachusetts Institute of Technology (MIT) ( email )

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David K. Levine

Washington University in St. Louis - Department of Economics ( email )

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St. Louis, MO 63130
United States

HOME PAGE: http://www.dklevine.com

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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