The Impact of NaïVe Advice and Observational Learning in Beauty-Contest Games

Tinbergen Institute Discussion Paper No. 07-015/1

35 Pages Posted: 2 Feb 2007

See all articles by Martin Kocher

Martin Kocher

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Florian Wakolbinger

University of Innsbruck - Department of Public Economics

Date Written: January 2007

Abstract

We study the impact of advice or observation on the depth of reasoning in an experimental beauty-contest game. Both sources of information trigger faster convergence to the equilibrium. Yet, we find that subjects who receive naïve advice outperform uninformed subjects permanently, whereas subjects who observe others' past behavior before making their decision do only have a temporary advantage over uninformed subjects. We show in a simulation that the latter result is due to subjects failing to make the most out of observing others.

Keywords: social learning, advice, observational learning, beauty-contest game

JEL Classification: C70, C72, C91

Suggested Citation

Kocher, Martin and Sutter, Matthias and Wakolbinger, Florian, The Impact of NaïVe Advice and Observational Learning in Beauty-Contest Games (January 2007). Available at SSRN: https://ssrn.com/abstract=960426 or http://dx.doi.org/10.2139/ssrn.960426

Martin Kocher

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Matthias Sutter (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

Florian Wakolbinger

University of Innsbruck - Department of Public Economics ( email )

Universitätsstraße 15
Innsbruck, Innsbruck 6020
Austria

Register to save articles to
your library

Register

Paper statistics

Downloads
93
rank
272,941
Abstract Views
842
PlumX Metrics