On the Inefficiency of Social Learning

Florian Brandl (), Wanying Huang () and Atulya Jain ()
Additional contact information
Florian Brandl: University of Bonn
Wanying Huang: Monash University
Atulya Jain: University of Bonn

No 433, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: We study whether a social planner can restore efficient learning, defined as a finite expected number of incorrect actions, in the canonical sequential social learning model. For each agent, the planner chooses what social information to disclose and what action-contingent transfer to offer. For unbounded signal distributions with regular tails, we show that whenever learning is inefficient without intervention, no combination of disclosure and transfers can restore efficiency with a finite budget. In particular, disclosure alone cannot restore efficiency. We identify agents' incentives as the key source of this impossibility. The budget requirement, however, concerns the transfers offered rather than the payments made. We show that even under full disclosure, the planner can achieve efficient learning using transfers while keeping expenditure arbitrarily small. Thus, the need for an unlimited budget does not entail large payments.

Keywords: Social learning; information disclosure; efficient learning; transfers (search for similar items in EconPapers)
JEL-codes: C73 D82 D83 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-10
New Economics Papers: this item is included in nep-des and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_433_2026.pdf First version, 2026 (application/pdf)

Related works:
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:ajk:ajkdps:433

Access Statistics for this paper

More papers in ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany Niebuhrstrasse 5, 53113 Bonn, Germany.
Bibliographic data for series maintained by ECONtribute Office ().