Brown Bag Seminar: Why Don’t You Take a Leaf Out of Her Book? An Experiment on Social Search

ABSTRACT: 

We propose an experimental analysis to investigate the impact of social learning on individuals' acquisition of information before making a choice and how behavioral biases and institutions affecting the perceived reliability of information affect this process. 

We use a stylized version of the canonical sequential search model and solve it with and without social information. Agents without social information act in isolation (first movers) while those with social information observe a peer's choice but not their search process (second movers). 

Across different treatments, we manipulate whether information about first movers’ reputation is available, and whether second movers can choose which first mover to observe, from a set of four. Experimental results show that social information has a positive effect on efficiency, especially when agents can choose endogenously their source of information.