A Robust Wisdom of the Crowd

Daniel Fershtman

No 19616, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies a model of observational learning where a sequence of agents each choose among risky actions (e.g., which technological innovation to adopt), the outcome of which is a function of an unknown state. Agents observe past choices and outcomes, but are short-lived and do not internalize the informational value of their actions. The main result is a “robust wisdom of the crowd†: a characterization of the set of information structures under which agents, without any intervention, all choose the socially optimal action, at any history, for any number of agents, and any prior.

Keywords: Observational learning; Technology adoption (search for similar items in EconPapers)
Date: 2024-10
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