American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Do We Follow Others When We Should? A Simple Test of Rational Expectations: Comment
American Economic Review
vol. 103,
no. 6, October 2013
(pp. 2633–42)
Abstract
The payoff of actions is estimated and the resulting empirical payoff is controlled for in regression analyses to formulate a test of rational expectations in information cascade experiments. We show that the empirical payoff of actions is a function of estimates of choice probabilities and estimates of the information parameters of the game. We introduce an alternative empirical payoff of actions with true values of the information parameters. Our improved measure of the success of social learning confirms that rational expectations are violated, but deviations from rational expectations are statistically significantly smaller than in Weizsacher (2010).Citation
Ziegelmeyer, Anthony, Christoph March, and Sebastian Krügel. 2013. "Do We Follow Others When We Should? A Simple Test of Rational Expectations: Comment." American Economic Review, 103 (6): 2633–42. DOI: 10.1257/aer.103.6.2633Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief
- D84 Expectations; Speculations