Heterogeneous Tastes and Social (Mis)Learning

Abstract

How do people learn from others’ actions when those people may have differing tastes? We present data from two experiments in which properly extracting information from other people’s actions requires an observer to account for how her predecessors’ tastes may have influenced those actions. We find support for social learning that obeys some basic comparative statics predicted by the rational model, but we also find significant and systematic departures. We study how inaccurate beliefs about others’ tastes can capture these departures and can lead participants to seemingly over- and under-infer from others’ behavior. Our observed pattern of inferences is consistent with participants holding beliefs about others where they over-weight the likelihood that others have tastes similar to their own. Information about others’ tastes does not eliminate these biases in inferences.