Social Learning about Consumption

International audienceThis paper applies a social learning model to the optimal consumption rule ofAllen & Carroll (2001), and delivers convincing convergence dynamics towards the optimalrule. These findings constitute a significant improvement regarding previous results in theliterature, both in terms of speed of convergence and parsimony of the learning model.The learning model exhibits several appealing features: it is frugal, easy to apply to avarious range of learning objectives, and requires few procedures and little information.Particular care is given to behavioural interpretation of the modelling assumptions in lightof evidence from the fields of psychology and social science. Our results highlight the needto depart from the genetic metaphor, and account for intentional decision-making, basedon agents’ relative performances. By contrast, we show that convergence is strongly hinderedby exact imitation processes, or random exploration mechanisms, which are usuallyassumed when modelling social learning behaviour. Our results suggest a method formodelling bounded rationality, which could be interestingly tested in a wide range of economicmodels with adaptive dynamics