Do We Learn from Our Own Experience or from Observing Others?

Ralph-C Bayer () and Hang Wu ()
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Hang Wu: School of Economics, University of Adelaide

No 2013-21, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: Learning in real life is based on different processes. Humans learn to a certain extent from their own experience but also learn by observing what non directly related others have done. In this paper we propose a generalized payoff assessment learning (GPAL) model which enables us to evaluate the relative influences of these two different models of learning. We apply GPAL to a homogeneous good Bertrand duopoly experiment with random matching and population pricing information. The model explains the observed pricing and learning behavior at least as well and often better than learning models from the literature but has the advantage that the relative influence of the learning models can be estimated. We find that the own experience overwhelmingly dominates learning, despite the useful information about behavior of potential future opponents contained in the population price distribution.

Keywords: Learning; Information; Bertrand Duopoly; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D83 L13 (search for similar items in EconPapers)
Pages: 27 pages.
Date: 2013-11
New Economics Papers: this item is included in nep-cbe and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2013-21

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