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Coordination and social learning

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  • Chong Huang

    (University of California, Irvine)

Abstract

This paper studies the interaction between coordination and social learning in a dynamic regime change game. Social learning provides public information, to which players overreact due to the coordination motive. Coordination affects the aggregation of private signals through players’ optimal choices. Such endogenous provision of public information results in informational cascades and thus inefficient herds, with positive probability, even if private signals have an unbounded likelihood ratio property. An extension shows that if players can individually learn, there exists an equilibrium in which inefficient herding disappears, and thus, coordination is almost surely successful.

Suggested Citation

  • Chong Huang, 2018. "Coordination and social learning," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 155-177, January.
    • Handle: RePEc:spr:joecth:v:65:y:2018:i:1:d:10.1007_s00199-016-1014-z
    DOI: 10.1007/s00199-016-1014-z
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    1. Artyom Jelnov & Yair Tauman & Chang Zhao, 2021. "Stag Hunt with unknown outside options," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(1), pages 303-335, July.

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    More about this item

    Keywords

    Coordination; Social learning; Inefficient herding; Dynamic global game; Common belief;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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