The impact of naive advice and observational learning in beauty-contest games

Martin Georg Kocher (), Matthias Sutter () and Florian Wakolbinger

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

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 naive 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 (search for similar items in EconPapers)
JEL-codes: C70 C72 C92 (search for similar items in EconPapers)
Date: 2007-01
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Related works:
Working Paper: The Impact of Naïve Advice and Observational Learning in Beauty-contest Games (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:inn:wpaper:2007-01

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