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IESE Research Papers,
IESE Business School

No D/1119: Social Learning and the Vanishing Value of Private Information

Manuel Mueller-Frank () and Itai Arieliy ()
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Manuel Mueller-Frank: IESE Business School, Postal: IESE Business School. Research Division, Av Pearson 21, 08034 Barcelona, SPAIN
Itai Arieliy: Israel Institute of Technology, Postal: Haifa, 3200003, Israel

Abstract: This paper considers a sequential social learning game with a general utility function, state and action space. We establish that the value of private information converges to zero almost surely in every Perfect Bayesian equilibrium of any sequential social learning game. We use this result to show that totally unbounded signals are necessary and sufficient for asymptotic learning to hold in every sequential social learning game. Finally, we assume that the utility function of each agent is a private random draw and establish robustness of our results.

Keywords: Social Learning; Information Cascades; Asymptotic Learning

38 pages, February 27, 2015

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