 Does one Bayesian make a difference?Journal of Economic Theory, 2014, vol. 154, issue C, 423-452 Abstract: This paper develops a model of repeated interaction in social networks among agents with differing degrees of sophistication. The focus of the model is observational learning; that is, each agent receives initial private information and makes inferences regarding the private information of others through the repeated interaction with his neighbors in the network. The main question is how well agents aggregate private information through their local interactions. I show that in finite networks consisting exclusively of non-Bayesian (boundedly rational) agents, who revise their choices by averaging over the previous period's observed choices, all agents fail to perfectly aggregate the privately held information. However, the presence of at least one Bayesian agent in a strongly connected network is shown to be generically sufficient for every agent, whether Bayesian or non-Bayesian, to perfectly aggregate the private information of all agents. Keywords: Social networks; Information aggregation; Bayesian learning; Boundedly rational learning; Social learning; Consensus (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:154:y:2014:i:c:p:423-452 DOI: 10.1016/j.jet.2014.09.005 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.