An Experiment On Social Mislearning

Authors:

Eyster, Erik (London School of Economics and Political Science)
Rabin, Matthew (Harvard University)
Weizsäcker, Georg (HU Berlin)

Abstract:

We investigate experimentally whether social learners appreciate the redundancy of information conveyed by their observed predecessors’ actions. Each participant observes a private signal and enters an estimate of the sum of all earlier-moving participants’ signals plus her own. In a first treatment, participants move single-file and observe all predecessors’ entries; Bayesian Nash Equilibrium (BNE) predicts that each participant simply add her signal to her immediate predecessor’s entry. Although 75% of participants do so, redundancy neglect by the other 25% generates excess imitation and mild inefficiencies. In a second treatment, participants move four per period; BNE predicts that most players anti-imitate some observed entries. Such anti-imitation occurs in 35% of the most transparent cases, and 16% overall. The remaining redundancy neglect creates dramatic excess imitation and inefficiencies: late-period entries are far too extreme, and on average participants would earn substantially more by ignoring their predecessors altogether.

Keywords:

social learning; redundancy neglect; experiments; higher-order beliefs

JEL-Classification:

B49

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An Experiment On Social Mislearning
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