Dispersed information, social networks, and aggregate behavior

Jakob Grazzini and Domenico Massaro

Economic Inquiry, 2021, vol. 59, issue 3, 1129-1148

Abstract: This article argues that, in the presence of dispersed information, individual‐level idiosyncratic noise may propagate at the aggregate level when agents are connected through a social network. When information about a common fundamental is incomplete and heterogeneous across agents, it is beneficial to consider the actions of other agents because of the additional information conveyed by these actions. We refer to the act of using other agents' actions in the individual decision process as social learning. This article shows that social learning aimed at reducing the error of individual actions with respect to the fundamental may increase the error of the aggregate action depending on the network topology. Moreover, if the network is very asymmetric, the error of the aggregate action does not decay as predicted by the law of large numbers.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/ecin.12995

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:59:y:2021:i:3:p:1129-1148

Ordering information: This journal article can be ordered from
https://ordering.onl ... s.aspx?ref=1465-7295

Access Statistics for this article

Economic Inquiry is currently edited by Tim Salmon

More articles in Economic Inquiry from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().