Eyster, Erik and Galeotti, Andrea and Kartik, Navin and Rabin, Matthew (2014) Congested observational learning. Games and Economic Behavior, 87 (C). pp. 519-538. DOI https://doi.org/10.1016/j.geb.2014.06.006
Eyster, Erik and Galeotti, Andrea and Kartik, Navin and Rabin, Matthew (2014) Congested observational learning. Games and Economic Behavior, 87 (C). pp. 519-538. DOI https://doi.org/10.1016/j.geb.2014.06.006
Eyster, Erik and Galeotti, Andrea and Kartik, Navin and Rabin, Matthew (2014) Congested observational learning. Games and Economic Behavior, 87 (C). pp. 519-538. DOI https://doi.org/10.1016/j.geb.2014.06.006
Abstract
We study observational learning in environments with congestion costs: an agent's payoff from choosing an action decreases as more predecessors choose that action. Herds cannot occur if congestion on every action can get so large that an agent prefers a different action regardless of his beliefs about the state. To the extent that switching away from the more popular action reveals private information, it improves learning. The absence of herding does not guarantee complete (asymptotic) learning, however, as information cascades can occur through perpetual but uninformative switching between actions. We provide conditions on congestion costs that guarantee complete learning and conditions that guarantee bounded learning. Learning can be virtually complete even if each agent has only an infinitesimal effect on congestion costs. We apply our results to markets where congestion costs arise through responsive pricing and to queuing problems where agents dislike waiting for service. © 2014 Elsevier Inc.
Item Type: | Article |
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Uncontrolled Keywords: | Social learning; Congestion; Queueing; Information aggregation |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 09 Jan 2015 10:41 |
Last Modified: | 30 Oct 2024 19:55 |
URI: | http://repository.essex.ac.uk/id/eprint/12224 |
Available files
Filename: EGKR-congestion.pdf