The impact of interaction and social learning on aggregate expectations

Bowden, Mark and McDonald, Stuart (2008) The impact of interaction and social learning on aggregate expectations. Computational Economics, 31 3: 289-306. doi:10.1007/s10614-007-9118-y

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Author Bowden, Mark
McDonald, Stuart
Title The impact of interaction and social learning on aggregate expectations
Journal name Computational Economics   Check publisher's open access policy
ISSN 0927-7099
1572-9974
Publication date 2008-04
Sub-type Article (original research)
DOI 10.1007/s10614-007-9118-y
Volume 31
Issue 3
Start page 289
End page 306
Total pages 18
Place of publication Netherlands
Publisher Springer
Language eng
Subject 140104 Microeconomic Theory
140103 Mathematical Economics
Abstract We examine the effect of information sharing within small world networks. Agents receive a signal correlated with the state of the world (SoW) which is adjusted following discussions with neighbours. If one agent in the network, referred to as an expert, does not engage in social learning (that is they always follow their own signal) then all agents learn the SoW. It is found that volatility in the mean level of expectations varies with changes in the number of experts and the network structure. A trade-off emerges between the level of volatility and the speed at which agents learn of changes to the SoW. A second finding is that certain network structures lead to information cascades.
Keyword Social learning
Expectations formation
Network economics
Information contagion
Volatility
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ
Additional Notes Published online: 4 December 2007

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
ERA 2012 Admin Only
School of Economics Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 3 times in Thomson Reuters Web of Science Article | Citations
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Created: Wed, 08 Apr 2009, 13:55:14 EST by Ms Sarada Rao on behalf of School of Economics