American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Social Learning with Costly Search
American Economic Journal: Microeconomics
vol. 8,
no. 1, February 2016
(pp. 83–109)
Abstract
We study a sequential social learning model where agents privately acquire information by costly search. Search costs of agents are private, and are independently and identically distributed. We show that asymptotic learning occurs if and only if search costs are not bounded away from zero. We explicitly characterize equilibria for the case of two actions, and show that the probability of late moving agents taking the suboptimal action vanishes at a linear rate. Social welfare converges to the social optimum as the discount rate converges to one if and only if search costs are not bounded away from zero. (JEL D81, D83)Citation
Mueller-Frank, Manuel, and Mallesh M. Pai. 2016. "Social Learning with Costly Search." American Economic Journal: Microeconomics, 8 (1): 83–109. DOI: 10.1257/mic.20130253Additional Materials
JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
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