This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. Forthcoming Articles
  5. Sequential Learning Under Informational Ambiguity

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Sequential Learning Under Informational Ambiguity

  • Jaden Yang Chen
American Economic Review (Forthcoming)

Abstract

This paper investigates a sequential social learning problem in which individuals face ambiguity about others’ signal structures and have max-min expected utility preferences, thereby exhibiting ambiguity aversion. Unlike previous findings, which suggest that learning outcomes depend on the specifics of the learning environment, this study establishes information cascades as a robust outcome under ambiguity. With sufficient ambiguity, cascades arise almost surely, regardless of the statistical properties of signal structures. Moreover, standard results predicting the absence of cascades can easily break down: even minimal ambiguity can trigger cascades when signals are bounded and lead to incorrect herding when signals are unbounded.

Downloads