Imitation in heterogeneous populations

Hedlund, Jonas and Oyarzun, Carlos (2017) Imitation in heterogeneous populations. Economic Theory, . doi:10.1007/s00199-017-1044-1

Author Hedlund, Jonas
Oyarzun, Carlos
Title Imitation in heterogeneous populations
Journal name Economic Theory   Check publisher's open access policy
ISSN 0938-2259
Publication date 2017-03-31
Sub-type Article (original research)
DOI 10.1007/s00199-017-1044-1
Open Access Status Not yet assessed
Total pages 37
Place of publication Heidelberg, Germany
Publisher Springer
Collection year 2018
Language eng
Formatted abstract
We study a boundedly rational model of imitation when payoff distributions of actions differ across types of individuals. Individuals observe others’ actions and payoffs, and a comparison signal. One of two inefficiencies always arises: (i) uniform adoption, i.e., all individuals choose the action that is optimal for one type but suboptimal for the other, or (ii) dual incomplete learning, i.e., only a fraction of each type chooses its optimal action. Which one occurs depends on the composition of the populations and how critical the choice is for different types of individuals. In an application, we show that a monopolist serving a populations of boundedly rational consumers cannot fully extract the surplus of high-valuation consumers, but can sell to consumers who do not value the good.
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
School of Economics Publications
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Created: Tue, 11 Apr 2017, 15:55:28 EST by Alys Hohnen on behalf of School of Economics