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Social Learning about Consumption

Isabelle Salle and Pascal Seppecher

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Abstract: This paper applies a social learning model to the optimal consumption rule of Allen & Carroll (2001), and delivers convincing convergence dynamics towards the optimal rule. These findings constitute a significant improvement regarding previous results in the literature, both in terms of speed of convergence and parsimony of the learning model. The learning model exhibits several appealing features: it is frugal, easy to apply to a various range of learning objectives, and requires few procedures and little information. Particular care is given to behavioural interpretation of the modelling assumptions in light of evidence from the fields of psychology and social science. Our results highlight the need to depart from the genetic metaphor, and account for intentional decision-making, based on agents' relative performances. By contrast, we show that convergence is strongly hindered by exact imitation processes, or random exploration mechanisms, which are usually assumed when modelling social learning behaviour. Our results suggest a method for modelling bounded rationality, which could be interestingly tested in a wide range of economic models with adaptive dynamics.

Keywords: Bounded rationality; Learning; Consumption rule; Evolutionary algorithms (search for similar items in EconPapers)
Date: 2016-10
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Citations: View citations in EconPapers (1)

Published in Macroeconomic Dynamics, 2016, 20 (7), pp.1795-1825. ⟨10.1017/S1365100515000097⟩

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Related works:
Journal Article: SOCIAL LEARNING ABOUT CONSUMPTION (2016) Downloads
Working Paper: Social Learning about Consumption (2013) Downloads
Working Paper: Social Learning about Consumption (2013) Downloads
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DOI: 10.1017/S1365100515000097

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