Observational Learning文献Observational learning under imperfect information.pdfVIP

Games and Economic Behavior 47 (2004) 72–86 /locate/geb Observational learning under imperfect information ˘ a,∗ b Bogaçhan Çelen and Shachar Kariv a Department of Economics, New York University, 269 Mercer Street, 7th Floor, New York, NY 10003, USA b Department of Economics, University of California, Berkeley, 505 Evans Hall, Berkeley, CA 94720, USA Received 27 December 2001 Abstract We explore Bayes-rational sequential decision making in a game with pure information externalities, where each decision maker observes only her predecessor’s binary action. Under perfect information the martingale property of the stochastic learning process is used to establish convergence of beliefs and actions. Under imperfect information, in contrast, beliefs and actions cycle forever. However, despite the stochastic instability, over time the private information is ignored and decision makers become increasingly likely to imitate their predecessors. Consequently, we observe longer and longer periods of uniform behavior, punctuated by increasingly rare switches.  2003 Elsevier Inc. All rights reserved. JEL classification: D82; D83 Keywords: Asymmetric information; Herd behavior; Informational cascades; Imperfect information 1. Introduction In the last decade a number of studies have explored the process of observational learning. Banerjee (1992) and Bikhchandani et al. (1992) introduced the basic concepts and stimulated further research in this area. The literature analyzes an economy where a sequence of Bayesian decision-makers (dms) make a once-in-a-lifetime decision under incomplete and asymmetric information. The typical conc