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Ali Jadbabaie (University of Pennsylvania) Micro Seminar

When Oct 15, 2014
from 04:00 PM to 05:30 PM
Where Keynes Room
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Ali Jadbabaie will give the Faculty Micro Seminar, at 4.00pm - 5.30pm, in the Keynes room.

Title: Information heterogeneity and social learning
with Pooya Molavi (MIT)  and Alireza TahbazSalehi (Columbia)

Abstract: We examine how the structure of a social network and the quality of information available to different agents determine the speed of social learning. To this end, we study a variant of the naive learning model of DeGroot according to which agents linearly combine their personal experiences with the views of their neighbors. We show that the rate of learning has a simple analytical characterization in terms of the relative entropy of agents’ signal structures and their eigenvector centralities. Our characterization establishes that the way information is dispersed throughout the social network has non-trivial implications for the rate of learning. In particular, we show that when the informativeness of different agents’ signal structures are com- parable in the sense of Blackwell, then a positive assortative matching of signal qualities and eigenvector centralities maximizes the rate of learning. On the other hand, if information structures are such that each individual possesses some information crucial for learning, then the rate of learning is higher when agents with the best signals are located at the periphery of the network. Finally, we show that the extent of asymmetry in the structure of the social network plays a key role in the long-run dynamics of the beliefs and  present a general  class of learning models for which similar results hold.