Learning from private and public observations of others' actions

Manuel Amador, Pierre Olivier Weill

Research output: Contribution to journalArticlepeer-review

30 Scopus citations

Abstract

We study the diffusion of dispersed private information in a large economy, where agents learn from the actions of others through two channels: a public channel, such as equilibrium market prices, and a private channel, for example local interactions. We show that, when agents learn only from the public channel, an initial release of public information increases agents' total knowledge at all times and increases welfare. When a private learning channel is present, this result is reversed: more initial public information reduces agents asymptotic knowledge by an amount in order of log(t) units of precision. When agents are sufficiently patient, this reduces welfare.

Original languageEnglish (US)
Pages (from-to)910-940
Number of pages31
JournalJournal of Economic Theory
Volume147
Issue number3
DOIs
StatePublished - May 1 2012

Keywords

  • Information aggregation
  • Learning
  • Value of information

Fingerprint

Dive into the research topics of 'Learning from private and public observations of others' actions'. Together they form a unique fingerprint.

Cite this