Abstract
The paper investigates the adaptive foundations of rational social learning. In a simple adaptive process individuals repeatedly learn from others’ actions in different social learning settings. If individuals distinguish settings, rational social learning emerges in the long-run. If individuals cannot distinguish settings or their experiences with each setting are scarce, long-run behavior is characterized by an Analogy-Based Expectations Equilibrium (Jehiel, 2005) where individuals make biased inferences from others’ actions. Adaptation across social learning settings renders Bayes’ rule payo-inferior compared to non-Bayesian belief updating rules and
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