Dynamic choice in social settings. Learning from the experiences of others

Charles F. Manski

doi:10.1016/0304-4076(93)90115-L

Dynamic choice in social settings. Learning from the experiences of others

Charles F. Manski^*

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

83 Scopus citations

Abstract

This paper uses elementary nonparametric regression theory to integrate economic and sociological thinking about expectations and choice. The main result is a Social Learning Proposition giving conditions implying that a person who observes the outcomes realized by a set of 'role models' can use these data to estimate nonparametrically the expected utility of an action. The Social Learning Proposition is first developed for static discrete choice and then extended to finite-horizon dynamic discrete choice problems. The key to the extension is a Representation Lemma showing that any dynamic problem has an observationally indistinguishable static representation.

Original language	English (US)
Pages (from-to)	121-136
Number of pages	16
Journal	Journal of Econometrics
Volume	58
Issue number	1-2
DOIs	https://doi.org/10.1016/0304-4076(93)90115-L
State	Published - Jul 1993

Funding

Correspondence to: Charles F. Manski, Department of Economics, University of Wisconsin, 1180 Observatory Drive, Madison, WI 53706, USA. *This research is supported by NSF grant SE.%8808276 and by NICHD grant tRO1 HD25842 HLB. The present paper largely supersedes ‘Path Utility Analysis of Dynamic Choice’, Social Systems Research Institute paper no. 8805, 1988. As this work has progressed, I have benefited from the comments of numerous individuals, including Mark Gertler, Jim Heckman, Joe Hotz, Rob Mare, Dan McFadden, Bob Miller, Ariel Pakes, Jim Powell, John Rust, Ban Salomon, Chris Sims, Peter Streufert, and Ken Wolpin. ’ Economists have made almost no effort to learn how decision makers form their expectations. The prevailing practice is to make assumptions about the information people possess and the way they use it. Sociologists routinely collect expectations data. Unfortunately, they do little more than pose loosely worded questions to respondents and interpret the responses as indicators of expectations. These aspects of economic and sociological practice are discussed and criticized in Manski (1992).

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/0304-4076(93)90115-L

Cite this

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title = "Dynamic choice in social settings. Learning from the experiences of others",

abstract = "This paper uses elementary nonparametric regression theory to integrate economic and sociological thinking about expectations and choice. The main result is a Social Learning Proposition giving conditions implying that a person who observes the outcomes realized by a set of 'role models' can use these data to estimate nonparametrically the expected utility of an action. The Social Learning Proposition is first developed for static discrete choice and then extended to finite-horizon dynamic discrete choice problems. The key to the extension is a Representation Lemma showing that any dynamic problem has an observationally indistinguishable static representation.",

author = "Manski, {Charles F.}",

note = "Funding Information: Correspondence to: Charles F. Manski, Department of Economics, University of Wisconsin, 1180 Observatory Drive, Madison, WI 53706, USA. *This research is supported by NSF grant SE.%8808276 and by NICHD grant tRO1 HD25842 HLB. The present paper largely supersedes {\textquoteleft}Path Utility Analysis of Dynamic Choice{\textquoteright}, Social Systems Research Institute paper no. 8805, 1988. As this work has progressed, I have benefited from the comments of numerous individuals, including Mark Gertler, Jim Heckman, Joe Hotz, Rob Mare, Dan McFadden, Bob Miller, Ariel Pakes, Jim Powell, John Rust, Ban Salomon, Chris Sims, Peter Streufert, and Ken Wolpin. {\textquoteright} Economists have made almost no effort to learn how decision makers form their expectations. The prevailing practice is to make assumptions about the information people possess and the way they use it. Sociologists routinely collect expectations data. Unfortunately, they do little more than pose loosely worded questions to respondents and interpret the responses as indicators of expectations. These aspects of economic and sociological practice are discussed and criticized in Manski (1992).",

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Dynamic choice in social settings. Learning from the experiences of others

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