Overabundant Information and Learning Traps

We study a model of sequential learning, where agents choose what kind of information to acquire from a large, fixed set of Gaussian signals with arbitrary correlation. In each period, a short-lived agent acquires a signal from this set of sources to maximize an individual objective. All signal realizations are public. We study the community's asymptotic speed of learning, and characterize the set of sources observed in the long run. A simple property of the correlation structure guarantees that the community learns as fast as possible, and moreover that a \best" set of sources is eventually observed. When the property fails, the community may get stuck in an inefficient set of sources and learn (arbitrarily) slowly. There is a specific, diverse set of possible final outcomes, which we characterize.

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Paper Number
17-024
Year
2017