Social Learning in a Changing World

Lones Smith

Working papers from Massachusetts Institute of Technology (MIT), Department of Economics

Abstract: In the social learning model of Banerjee and Bikhchandani, Hirshleiger and Welch, individuals take action sequentially after observing the history of actions taken by the predecessors and an informative private signal. If the state of the world is changing stochastically over time during the learing process, only temporary informational cascades - situations where socially valuable information is wasted - can arise. Furthermore, no cascade ever arises when the environment changes in a sufficiently unpredictable way.

Keywords: LEARNING (search for similar items in EconPapers)
JEL-codes: D83 (search for similar items in EconPapers)
Pages: 11 pages
Date: 1996
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Journal Article: Social learning in a changing world (1998)
Working Paper: Social Learning in a Changing World
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