NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Naive Learning with Uninformed Agents

Abhijit Banerjee, Emily Breza, Arun G. Chandrasekhar, Markus Mobius

NBER Working Paper No. 25497
Issued in January 2019
NBER Program(s):Development Economics, Economics of Education, Industrial Organization, Labor Studies, Public Economics, Political Economy, Productivity, Innovation, and Entrepreneurship

The DeGroot model has emerged as a credible alternative to the standard Bayesian model for studying learning on networks, offering a natural way to model naive learning in a complex setting. One unattractive aspect of this model is the assumption that the process starts with every node in the network having a signal. We study a natural extension of the DeGroot model that can deal with sparse initial signals. We show that an agent's social influence in this generalized DeGroot model is essentially proportional to the number of uninformed nodes who will hear about an event for the first time via this agent. This characterization result then allows us to relate network geometry to information aggregation. We identify an example of a network structure where essentially only the signal of a single agent is aggregated, which helps us pinpoint a condition on the network structure necessary for almost full aggregation. We then simulate the modeled learning process on a set of real world networks; for these networks there is on average 21.6% information loss. We also explore how correlation in the location of seeds can exacerbate aggregation failure. Simulations with real world network data show that with clustered seeding, information loss climbs to 35%.

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Document Object Identifier (DOI): 10.3386/w25497

 
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