Bayesian Learning in Social Networks

Daron Acemoglu, Munther A. Dahleh, Ilan Lobel and Asuman Ozdaglar

The Review of Economic Studies, 2011, vol. 78, issue 4, 1201-1236

Abstract: We study the (perfect Bayesian) equilibrium of a sequential learning model over a general social network. Each individual receives a signal about the underlying state of the world, observes the past actions of a stochastically generated neighbourhood of individuals, and chooses one of two possible actions. The stochastic process generating the neighbourhoods defines the network topology. We characterize pure strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning--convergence (in probability) to the right action as the social network becomes large. We show that when private beliefs are unbounded (meaning that the implied likelihood ratios are unbounded), there will be asymptotic learning as long as there is some minimal amount of "expansion in observations". We also characterize conditions under which there will be asymptotic learning when private beliefs are bounded. Copyright 2011, Oxford University Press.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (223)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdr004 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Bayesian Learning in Social Networks (2008)
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:oup:restud:v:78:y:2011:i:4:p:1201-1236

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().