Social Learning about Consumption
Résumé
This paper applies a social learning model to the optimal consumption rule of
Allen & Carroll (2001), and delivers convincing convergence dynamics towards the optimal
rule. These findings constitute a significant improvement regarding previous results in the
literature, both in terms of speed of convergence and parsimony of the learning model.
The learning model exhibits several appealing features: it is frugal, easy to apply to a
various range of learning objectives, and requires few procedures and little information.
Particular care is given to behavioural interpretation of the modelling assumptions in light
of evidence from the fields of psychology and social science. Our results highlight the need
to depart from the genetic metaphor, and account for intentional decision-making, based
on agents’ relative performances. By contrast, we show that convergence is strongly hindered
by exact imitation processes, or random exploration mechanisms, which are usually
assumed when modelling social learning behaviour. Our results suggest a method for
modelling bounded rationality, which could be interestingly tested in a wide range of economic
models with adaptive dynamics.