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The evolution of social learning and its economic consequences

Benjamin Bossan, Ole Jann and Peter Hammerstein

Journal of Economic Behavior & Organization, 2015, vol. 112, issue C, 266-288

Abstract: We use an evolutionary model to simulate agents who choose between two options with stochastically varying payoffs. Two types of agents are considered: individual learners, who rely on trial-and-error methods, and social learners, who imitate the wealthiest sampled individual. Agents adapt to changing environments within one generation by using their respective learning strategy. The frequency of the agent types adapts between generations according to the agents’ acquired wealth. During the course of evolution, social learning becomes dominant, resulting in three major effects: First, for better or worse, the decisions of social learners are more exaggerated than those of individual learners. Second, social learners react with a delay to changes in the environment. Third, the behavior of social learners becomes more and more detached from reality. We argue that our model gives insights into economic systems and markets.

Keywords: Imitation; Learning strategies; Evolution; Natural selection; Market inefficiencies (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.jebo.2015.01.010

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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