Hostname: page-component-7b9c58cd5d-nzzs5 Total loading time: 0 Render date: 2025-03-16T13:43:09.953Z Has data issue: false hasContentIssue false
  • English
  • Français

Experimenting and learning with localized direct communication

Published online by Cambridge University Press:  14 March 2025

Vincent Mak  and
Rami Zwick
Vincent Mak*
Affiliation:
Cambridge Judge Business School, University of Cambridge, Trumpington Street Cambridge CB2 1AG, UK
Rami Zwick*
Affiliation:
Department of Management and Marketing, School of Business Administration, University of California, 92521 Riverside, CA, USA
*
v.mak@jbs.cam.ac.uk
ramiz@ucr.edu
Get access Rights & Permissions [Opens in a new window]

Abstract

We report an experiment in which subjects may learn from each other. Specifically, a “queue” of players who are identically informed ex ante make decisions in sequence over two lotteries. Every player except the first in the queue observes (only) his immediate predecessor’s choice and payoff before making his own decision. In equilibrium decisions are identical from the first or second player onwards in all experimental conditions. However, complete adherence to equilibrium play is seldom observed in our experiment. We further analyze our data using a quantal response equilibrium approach and test for behavioral regularities related to base rate fallacy/conservatism bias, social conformity/rebelliousness, and preference for experimentation (preferring the lottery with potentially more information spillover value). Our estimations reveal a consistent preference for experimentation across conditions, and further analysis offers some support to our surmise that this behavioral regularity is due, in part, to an attempt to influence others behind in the queue.

Keywords

CommunicationBayesian learningSocial learningPreference for experimentation

JEL classification

C92: Laboratory, Group Behavior D83: Search • Learning • Information and Knowledge • Communication • Belief • Unawareness
Type
Original Paper
Information
Experimental Economics , Volume 17 , Issue 2 , June 2014 , pp. 262 - 284
Copyright
Copyright © 2013 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Electronic Supplementary Material The online version of this article (doi:https://doi.org/10.1007/s10683-013-9366-8) contains supplementary material, which is available to authorized users.

References

Acemoglu, D., Ozdaglar, A., & ParandehGheibi, A. (2009). Spread of (mis)information in social networks. Games and Economic Behavior, 70, 194–227. 10.1016/j.geb.2010.01.005CrossRefGoogle Scholar
Acemoglu, D., Dahleh, M. A., Lobel, I., & Ozdaglar, A. (2011). Bayesian learning in social networks. Review of Economic Studies, 78, 1201–1236. 10.1093/restud/rdr004CrossRefGoogle Scholar
Allsop, L., & Hey, J. D. (2000). Two experiments to test a model of herd behavior. Experimental Economics, 3(2), 121–136.CrossRefGoogle Scholar
Anderson, L. R., & Holt, C. A. (1997). Information cascades in the laboratory. The American Economic Review, 87(5), 847–862.Google Scholar
Anderson, L. R., Holt, C. A. Smith, V., & Plott, C. A. (2008). Information cascade experiments. Handbook of experimental economics results, Amsterdam: North-Holland.Google Scholar
Andreoni, J., Miller, J. H. Plott, C. R., & Smith, V. L. (2008). Analyzing choice with revealed preference: is altruism rational?. Handbook of experimental economics results, Amsterdam: North-Holland.Google Scholar
Bala, V., & Goyal, S. (1998). Learning from neighbours. Review of Economic Studies, 65(3), 595–621. 10.1111/1467-937X.00059CrossRefGoogle Scholar
Banerjee, A. (1992). A simple model of herd behavior. The Quarterly Journal of Economics, 107(3), 797–817. 10.2307/2118364CrossRefGoogle Scholar
Bikhchandani, S., Hirshleifer, D., & Welch, I. (1992). A theory of fads, fashion, custom, and cultural change as informational cascades. Journal of Political Economy, 100(5), 992–1026. 10.1086/261849CrossRefGoogle Scholar
Boyce, J. R., Bruner, D. M., & McKee, M. (2009). Be my guinea pig: information spillovers in a one-armed bandit game. Working paper.Google Scholar
Callander, S., & Hörner, J. (2009). The wisdom of the minority. Journal of Economic Theory, 144, 1421–1439.e2. 10.1016/j.jet.2009.02.001CrossRefGoogle Scholar
Camerer, C. Kagel, J., & Roth, A. (1995). Individual decision making. Handbook of experimental economics, Princeton: Princeton University Press.Google Scholar
Çelen, B., & Kariv, S. (2004). Observational learning under imperfect information. Games and Economic Behavior, 47, 72–86. 10.1016/S0899-8256(03)00179-9CrossRefGoogle Scholar
Çelen, B., & Kariv, S. (2004). Distinguishing informational cascades from herd behavior in the laboratory. The American Economic Review, 94(3), 484–498. 10.1257/0002828041464461CrossRefGoogle Scholar
Çelen, B., & Kariv, S. (2005). An experimental test of observational learning under imperfect information. Economic Theory, 26(3), 677–699. 10.1007/s00199-004-0542-0CrossRefGoogle Scholar
Choi, S., Gale, D., & Kariv, S. (2008). Social learning in networks: a quantal response equilibrium analysis of experimental data. Journal of Economic Theory, 143(1), 302–330. 10.1016/j.jet.2008.03.001CrossRefGoogle Scholar
Gale, D., & Kariv, S. (2003). Bayesian learning in social networks. Games and Economic Behavior, 45, 329–346. 10.1016/S0899-8256(03)00144-1CrossRefGoogle Scholar
Goeree, J. K., Palfrey, T. R., Rogers, B. W., & McKelvey, R. D. (2007). Self-correcting information cascades. Review of Economic Studies, 74, 733–762. 10.1111/j.1467-937X.2007.00438.xCrossRefGoogle Scholar
Goeree, J. K., & Yariv, L. (2007). Conformity in the lab. Working paper, California Institute of Technology.Google Scholar
Grosse, N. D. (2010). Experimenting with strategic experimentation: risk taking, neighborhood size and network structure. Jena Economic Research Papers, ISSN, 1864–7057.Google Scholar
Guarino, A., Harmgart, H., & Huck, S. (2011). Aggregate information cascades. Games and Economic Behavior, 73, 167–185. 10.1016/j.geb.2011.01.003CrossRefGoogle Scholar
Guarino, A., & Jehiel, P. (2013). Social learning with coarse inference. American Economic Journal: Microeconomics, 5, 147–174.Google Scholar
Hoffman, E., McCabe, K., Smith, V. Plott, C. R., & Smith, V. L. (2008). Reciprocity in ultimatum and dictator games: an introduction. Handbook of experimental economics results, Amsterdam: North-Holland.Google Scholar
Huck, S., & Oechssler, J. (2000). Informational cascades in the laboratory: do they occur for the right reasons?. Journal of Economic Psychology, 21, 661–671. 10.1016/S0167-4870(00)00025-8CrossRefGoogle Scholar
Hung, A., & Plott, C. R. (2001). Information cascades: replication and an extension to majority rule and conformity-rewarding institutions. The American Economic Review, 91(5), 617–628. 10.1257/aer.91.5.1508CrossRefGoogle Scholar
Katz, E., & Lazarsfeld, P. F. (1955). Personal influence: the part played by people in the flow of mass communications, New York: Free Press.Google Scholar
Kübler, D., & Weizsäcker, G. (2004). Limited depth of reasoning and failure of cascade formation in the laboratory. Review of Economic Studies, 71, 425–441. 10.1111/0034-6527.00290CrossRefGoogle Scholar
Larson, N. (2011). Inertia in social learning from a summary statistic. Working paper.CrossRefGoogle Scholar
McKelvey, R. D., & Palfrey, T. R. (1995). Quantal response equilibria for normal-form games. Games and Economic Behavior, 10, 6–38. 10.1006/game.1995.1023CrossRefGoogle Scholar
McKelvey, R. D., & Palfrey, T. R. (1998). Quantal response equilibria for extensive form games. Experimental Economics, 1, 9–41.CrossRefGoogle Scholar
Rogers, E. M. (2003). Diffusion of innovations, New York: Free Press.Google Scholar
Smith, L., & Sørensen, P. N. (2008). Informational herding and optimal experimentation. Working paper.Google Scholar
Supplementary material: File

Mak and Zwick supplementary material

Mak and Zwick supplementary material
Download Mak and Zwick supplementary material(File)
File 344.1 KB