Designing social learning

Aleksei Smirnov and Egor Starkov

European Economic Review, 2025, vol. 178, issue C

Abstract: This paper studies strategic communication in the context of social learning. Product reviews are used by consumers to learn product quality, but in order to write a review, a consumer must be convinced to purchase the item first. When reviewers care about the welfare of future consumers, this leads to a conflict: a reviewer today wants the future consumers to purchase the item even when this comes at a loss to them, so that more information is revealed for the consumers that come after. We show that due to this conflict, communication via reviews is inevitably noisy, regardless of whether reviewers can commit to a communication strategy or have to resort to cheap talk. The optimal communication mechanism involves truthful communication of extreme experiences and pools the moderate experiences together.

Keywords: Social learning; Dynamic games; Strategic information transmission; Experimentation (search for similar items in EconPapers)
JEL-codes: C73 D83 L15 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Designing Social Learning (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:178:y:2025:i:c:s0014292125001631

DOI: 10.1016/j.euroecorev.2025.105113

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