An Experiment on Belief Formation in Networks

Journal article
(Original article)


Publication Details

Author(s): Grimm V, Mengel F
Journal: Journal of the European Economic Association
Publication year: 2018
ISSN: 1542-4766
Language: English


Abstract

We study belief formation in social networks using a laboratory
experiment. Participants in our experiment observe an imperfect private
signal on the state of the world and then simultaneously and repeatedly
guess the state, observing the guesses of their network neighbors in
each period. Across treatments we vary the network structure and the
amount of information participants have about the network. Our first
result shows that information about the network structure matters and in
particular affects the share of correct guesses in the network. This is
inconsistent with the widely used naive (deGroot) model. The naive
model is, however, consistent with a larger share of individual
decisions than the competing Bayesian model, whereas both models
correctly predict only about 25%–30% of consensus beliefs. We then
estimate a larger class of models and find that participants do indeed
take network structure into account when updating beliefs. In particular
they discount information from neighbors if it is correlated, but in a
more rudimentary way than a Bayesian learner would.


FAU Authors / FAU Editors

Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie


External institutions with authors

University of Nottingham


How to cite

APA:
Grimm, V., & Mengel, F. (2018). An Experiment on Belief Formation in Networks. Journal of the European Economic Association.

MLA:
Grimm, Veronika, and Friederike Mengel. "An Experiment on Belief Formation in Networks." Journal of the European Economic Association (2018).

BibTeX: 

Last updated on 2018-05-11 at 12:41