SBEE seminar series: Marina Agranov
01:00 pm -
Social Learning in Groups: an Experimental Study
(joint with Gabriel Lopez-Moctezuma, Philipp Strack and Omer Tamuz)
A large literature in economics and finance has shown the dangers associated with — and the inefficiencies that arise from — the imitation of others’ actions, and from herd behavior in particular. We contribute to this literature by providing empirical evidence of the benefits of imitation in repeated social learning environments. We show experimentally that observing the actions of others improves the quality of decisions and leads to higher information aggregation rates, even in settings where the actions of others do not provide additional information, beyond the private information available to agents.
Specifically, we conduct a series of controlled laboratory experiments, in which subjects repeatedly try to estimate an unknown state of nature while observing private information that arrives sequentially, and, depending on the treatment, additional observations of others. There are no direct externalities in this setting, and each subject is rewarded independently of others for estimating correctly. Between treatments, we vary the information available to subjects at the time they make their guesses. This simple setting allows us to address two questions. First, we document whether at all and to what extent people are capable of extracting the information contained in their peers’ private signals by observing their actions, in a repeated setting. Second, we study the usefulness of observing other people’s decisions when private signals of others are also available, and, thus, others' actions should be irrelevant.
Marina Agranov is a professor of economics at CalTech. She is trained both as an economic theorist and an experimentalist and studies how communication affects outcomes in various strategic environments. She combines theory and experiments to study how institutions affect credible transmission of information. In particular, her research has explored signaling games with asymmetric information in the context of elections and announcement games.
She also investigates the vagueness property of natural language. For example, she has studied the efficiency of using natural language (words) with precise and ambiguous messages. From experiments, she and her colleagues have shown that under the proper circumstances, using words does not decrease the efficiency of communication. Economics often studies the outcomes of interactions between agents, but by studying the process of decision making—instead of just the final decision—Agranov is trying to understand the mechanisms that govern decision making and ultimately improve the predictive power of economic theory.
The Social, Behavioral and Experimental Economics seminar series is a joint presentation of the School of Information, the Ross School of Business and the Department of Economics (LSA).
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