Learning from private and public observations of othersʼ actions
Manuel Amador and
Pierre-Olivier Weill ()
Journal of Economic Theory, 2012, vol. 147, issue 3, 910-940
We study the diffusion of dispersed private information in a large economy, where agents learn from the actions of others through two channels: a public channel, such as equilibrium market prices, and a private channel, for example local interactions. We show that, when agents learn only from the public channel, an initial release of public information increases agentsʼ total knowledge at all times and increases welfare. When a private learning channel is present, this result is reversed: more initial public information reduces agents asymptotic knowledge by an amount in order of log(t) units of precision. When agents are sufficiently patient, this reduces welfare.
Keywords: Information aggregation; Learning; Value of information (search for similar items in EconPapers)
JEL-codes: D80 D83 E58 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:3:p:910-940
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