Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56839
Year of Publication: 
2012
Series/Report no.: 
Jena Economic Research Papers No. 2012,006
Publisher: 
Friedrich Schiller University Jena and Max Planck Institute of Economics, Jena
Abstract: 
Weizsäcker (2010) estimates the payoff of actions to test rational expectations and to measure the success of social learning in information cascade experiments. He concludes that participants perform poorly when learning from others and that rational expectations are violated. We show that his estimated payoffs rely on estimates of the publicly known prior and signal qualities which may lead the formulated test of rational expectations to generate false positives. We rely on the true values of the prior and signal qualities to estimate the payoff of actions. We confirm that the rational expectations hypothesis is rejected, but we measure a much larger success of social learning.
Subjects: 
information cascades
laboratory experiments
quantal response equilibrium
JEL: 
C92
D82
Document Type: 
Working Paper

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