SFB 303 Discussion Paper No. B - 365

Author: Schlag, Karl H.
Title: Which one should I imitate?
Abstract: We consider the model of social learning by Schlag (1996). Individuals must repeatedly choose an action in a multi-armed bandit. We assume that each indivdiual observes the outcomes of two other individuals' choices before her own next choice must be made -- the original model only allows for one observation. Selection of optimal behavior yields a variant of the proportional imitation rule -- the optimal rule based on one observation. When each individual uses this rule then the adaptation of actions in an infinite population follows an aggregate monotone dynamic.
Keywords: social learning, multi-armed bandit, imitation, payoff increasing, proportional imitaiton rule, aggregate monotone dynamic.
JEL-Classification-Number: C72, C79
Creation-Date: March 1996
URL: ../1996/b/bonnsfb365.pdf

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