An Experiment on Belief Formation in Networks
Friederike Mengel (U of Essex & Maastricht U) will talk about "An Experiment on Belief Formation in Networks" -- see abstract below
Where: BELSS -- our experimental lab on the 3rd floor of the Roentgen building
When: Wednesday April 9 at 17.30-18.20+
We analyse belief formation in social networks in a laboratory experiment. Our 3 x 3 design varies the network structure and the amount of information agents have about it. Agents observe an imperfect private signal on the true state of the world and then repeatedly guess the true state, observing the guesses of their network neighbours in each period. Participants' individual choices are well explained by a model of naive learning, but not} by Bayesian learning. Comparative statics regarding signal dispersion and the time it takes to reach a consensus are also in line with the naive model. The model predictions regarding whether a consensus is reached and whether the truth is learned are only partially reflected in the data. Changes in behaviour induced by the amount of information participants have about the network structure cannot be explained by the naive model at all. We then estimate a larger class of models and find that participants do account for correlations in neighbours' guesses (unlike the naive model suggests), albeit in a simpler way than Bayesian learning. We propose a simple belief formation model that reflects this (and other) properties and show that it does well when confronted with new data.
We hope many will attend. If you have questions, contact Martin Dufwenberg (firstname.lastname@example.org), Joshua Miller (email@example.com) or Fabrizio Iozzi (firstname.lastname@example.org).