## Economics of Social learning (Ec 517)

**Christophe Chamley**

Office hours: Wednesday, room 401, 2-5 pm, conditional on making an appointment not later than the day before. You are also welcome when my office door is open.

TA: Meng Wu

Office hours: Monday, 2:30-4:30 pm, B18, SSW

### Class 1 (1/23)

Lecture notes:

- Chapters 1 and 2: Bayesian learning, Sequences of information.

- Assignment 1 :
- Exercises 1.2 and 1.3 in Chapter 1. Try to do them without looking at the answers in the class notes. Prepare answers. Do not send them. They will not be graded. We will go over the answers in class.
- Read the paper: Stone, L.D. (1992). "Search for SS `Central America': Mathematical Treasure Hunting,"
*Interfaces*,**22**, 32-54. - Write an essay (2 pages) to provide your own evaluation of the search. Do not go over the description of the search. Assume that the reader has read the article. But write your answer such that the reader knows that you have well understood the paper.
- Send the essay in pdf format to me not later than Tuesday midnight. We will discuss the paper in class.

All the assignments have to be sent to the TA, in pdf format, and not later than the deadline.

### Class 2 (2/6)

From an article in a paper today:

"n *Let’s Make a Deal*, the presenter, Monty Hall, gave contestants a choice to pick one of three doors. A prize — a Cadillac — was behind one door. Behind the other two was a goat. The contestant started by picking a door, which remains closed. Monty, who was able to see behind the doors, then opened one of the two remaining doors — but always one that revealed a goat. The contestant was then asked either to stay with the original choice or to switch." What is your choice? Explain.

### Class 3 (2/13)

- Chapter 3: Social learning

- Chapter 4: Cascades and Herds (some--minor--changes of the text have been marked with red asterisks)

We have covered Section 4.1. except for

p. 53"the social optimum" and "monopoly pricing",

the section "cascades and herds" (p. 56). We will see that in Class 3. READ this section as a preparation.

We have seen the geometric representation.

Prepare the section on "Black sheeps".

Browse Section 4.2.

**ASSIGNMENT 2: **Exercises 4.2 and 4.3.