Social Learning in Beauty-Contest Games

Kocher, Martin; Sutter, Matthias and Wakolbinger, Florian (January 2014): Social Learning in Beauty-Contest Games. In: Southern Economic Journal, Vol. 80, No. 3: pp. 586-613

Abstract

We study the impact of social learning on the depth of reasoning in an experimental beauty-contest game. Naive advice and observation of others' decisions as two forms of social learning trigger faster convergence to the equilibrium. We find that subjects who receive advice outperform uninformed subjects permanently, whereas subjects who observe others' past behavior before making their decision only have a temporary advantage over uninformed subjects. A series of control-treatments and simulations indicate that the latter result is due to subjects failing to make the most out of observing others.

• Item Type: Journal article
• Form of publication: Publisher's Version
• Faculties: Economics > Chairs > Chair of Empirical Economics
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C70, C72, C91
• Language: English