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Does Observation Influence Learning?

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  • Olivier Armantier

Abstract

A common value auction experiment is run to compare the relative influence of observation and experience on learning. It is shown that the ex-post observation of opponents' actions and payoffs homogenizes behavior and accelerates learning toward the Nash equilibrium. Besides, experiential and observational learning are both relevant and of comparable magnitude. A general reinforcement model for continuous strategies, encompassing choice reinforcement learning, direction learning and payoff dependent imitation, performs well in explaining the experimental data and it dominates competing models such as the reinforcement of best response strategies.

Suggested Citation

  • Olivier Armantier, 2001. "Does Observation Influence Learning?," Department of Economics Working Papers 01-04, Stony Brook University, Department of Economics.
    • Handle: RePEc:nys:sunysb:01-04
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    Cited by:

    1. Ralph-C. Bayer & Hang Wu, 2013. "Do We Learn from Our Own Experience or from Observing Others?," School of Economics and Public Policy Working Papers 2013-21, University of Adelaide, School of Economics and Public Policy.
    2. Dennis A. V. Dittrich & Werner Güth & Martin G. Kocher & Paul Pezanis‐Christou, 2012. "Loss Aversion and Learning to Bid," Economica, London School of Economics and Political Science, vol. 79(314), pages 226-257, April.
    3. Shafran, Aric P., 2012. "Learning in games with risky payoffs," Games and Economic Behavior, Elsevier, vol. 75(1), pages 354-371.
    4. Marco Casari & John C. Ham & John H. Kagel, 2007. "Selection Bias, Demographic Effects, and Ability Effects in Common Value Auction Experiments," American Economic Review, American Economic Association, vol. 97(4), pages 1278-1304, September.
    5. Zacharias Maniadis & Joshua Miller, 2012. "The Weight of Personal Experience: an Experimental Measurement," Working Papers 452, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. Alan Mehlenbacher, 2007. "Multiagent System Platform for Auction Simulations," Department Discussion Papers 0706, Department of Economics, University of Victoria.
    7. Guillaume Fréchette, 2012. "Session-effects in the laboratory," Experimental Economics, Springer;Economic Science Association, vol. 15(3), pages 485-498, September.
    8. Robert S. Gazzale, 2009. "Learning to Play Nash from the Best," Department of Economics Working Papers 2009-03, Department of Economics, Williams College.
    9. Hanaki, Nobuyuki & Kirman, Alan & Pezanis-Christou, Paul, 2018. "Observational and reinforcement pattern-learning: An exploratory study," European Economic Review, Elsevier, vol. 104(C), pages 1-21.
    10. Johanna Goertz, 2012. "Market composition and experience in common-value auctions," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 106-127, March.
    11. repec:cup:judgdm:v:3:y:2008:i:7:p:483-492 is not listed on IDEAS
    12. Wouter van den Bos & Jian Li & Tatiana Lau & Eric Maskin & Jonathan D. Cohen & P. Read Montague & Samuel M. McClure, 2008. "The value of victory: social origins of the winner's curse in common value auctions," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3(7), pages 483-492, October.
    13. John C. Ham & Steven F. Lehrer, 2020. "Instrumental variables estimation of a simple dynamic model of bidding behavior in private value auctions," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 6(2), pages 139-155, December.
    14. Ignacio Esponda Jr. & Emanuel Vespa Jr., 2014. "Hypothetical Thinking and Information Extraction in the Laboratory," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 180-202, November.
    15. Olivier Armantier, 2006. "Do Wealth Differences Affect Fairness Considerations?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 391-429, May.
    16. Masiliūnas, Aidas, 2023. "Learning in rent-seeking contests with payoff risk and foregone payoff information," Games and Economic Behavior, Elsevier, vol. 140(C), pages 50-72.
    17. Grosskopf, Brit & Rentschler, Lucas & Sarin, Rajiv, 2018. "An experiment on first-price common-value auctions with asymmetric information structures: The blessed winner," Games and Economic Behavior, Elsevier, vol. 109(C), pages 40-64.
    18. Fréchette, Guillaume R., 2009. "Learning in a multilateral bargaining experiment," Journal of Econometrics, Elsevier, vol. 153(2), pages 183-195, December.
    19. Armantier, Olivier, 2004. "Does observation influence learning?," Games and Economic Behavior, Elsevier, vol. 46(2), pages 221-239, February.
    20. Goeree, Jacob K. & Offerman, Theo & Schram, Arthur, 2006. "Using first-price auctions to sell heterogeneous licenses," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 555-581, May.

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    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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