Observational learning is typically examined when agents have precise information about their position in the sequence of play. We present a model in which agents are uncertain about their positions. Agents are allowed to have arbitrary ex-ante beliefs about their positions: they may observe...

Observational learning is typically examined when agents have precise information about their position in the sequence of play. We present a model in which agents are uncertain about their positions. Agents sample the decisions of past individuals and receive a private signal about the state of...

We develop a theoretical framework for studying the effects of interaction on the quaJity of decision-making by monetary policy committees. We show that interaction, i.e. increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting...

A Bayesian agent evaluates a stream of information over a finite period before deciding on which of two alternatives to adopt. At any point, the agent is free to convert information into an informative, binary signal. When information arrives at a roughly constant rate, an agent who frequently...

When do groups and societies choose to be uninformed? We study a committee that needs to vote on a reform which will give every member a private state- dependent payoff. The committee can vote to learn the state at no cost. We show that the committee decides not to learn the state when...

We develop a theoretical framework for studying the effects of interaction on the quality of decision-making by monetary policy committees. We show that interaction, ie increasing one's expertise through an exchange of views, is most likely not to result in interdependent voting behaviour....

There are many important decision problems where learning through experimentation is costly or impossible. In these situations, individuals may try to learn from observing the outcomes of others who have made similar decisions. Often, however, information about others comprises a selected...

We investigate the role played by the media in the expectations formation process of households. Using a novel news-topic-based approach we show that news types the media choose to report on, e.g., fiscal policy, health, and politics, are good predictors of households' stated inflation...

Based on OECD evidence, equity/housing-price busts and credit crunches are followed by substantial increases in public consumption. These increases in unproductive public spending lead to increases in distortionary marginal taxes, a policy in sharp contrast with presumably optimal Keynesian...

This paper proposes a new approach for modeling investor fear after rare disasters. The key element is to take into account that investors' information about fundamentals driving rare downward jumps in the dividend process is not perfect. Bayesian learning implies that beliefs about the...