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Social Learning with Partial and Aggregate Information: Experimental Evidence

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  • Cavatorta, Elisa
  • Guarino, Antonio
  • Huck, Steffen

Abstract

In our information cascade experiments, we study social learning in decision- making situations in which decisions “not to do†are unobservable. Subjects, in sequence, choose whether to invest or not, without knowing their position. They observe a private signal and the number of investments made by their predecessors, but not how many predecessors have chosen not to invest. We find that down cas- cades, in which agents neglect the signal and do not invest, occur, in contrast with the equilibrium predictions. Up cascades, in which agents invest independently of the signal, occur, but less than in equilibrium.

Suggested Citation

  • Cavatorta, Elisa & Guarino, Antonio & Huck, Steffen, 2023. "Social Learning with Partial and Aggregate Information: Experimental Evidence," CEPR Discussion Papers 18461, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18461
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    More about this item

    Keywords

    Social learning; Informational cascades; Asymmetric information; Laboratory experiments;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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