Social Learning and Selective Attention / Andrew Caplin, John Leahy, Filip Matějka.

Format:

Book

Author/Creator:

Caplin, Andrew.

Contributor:

National Bureau of Economic Research.

Leahy, John.

Matějka, Filip.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21001.

NBER working paper series no. w21001

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Popularity is self reinforcing. The attention garnered by popular options propels further interest in them. Yet rather than blindly follow the crowd, most pay attention to how well these items match their tastes. We model this role of social learning in guiding selective attention and market dynamics. We confirm that attention focuses on options that quickly achieve popularity. Information externalities render the chosen set smaller than socially optimal. This rationalizes antitrust policies that encourage early experimentation. When attention costs are based on Shannon entropy, optimal policies are computable. With rich data, optimal choices can be identified for all consumer types.

Notes:

Print version record

March 2015.