IFREE-Sponsored Lecture Series at ESI

Parker Ballinger, Ph.D.
Oct. 21st, 2011

Individual versus Social Learning: The Importance of Demonstrability

"We start by asking ourselves how people approach challenging, complex individual choice tasks that they will only face one time. Specifically, all of us must make consumption and saving choices over our lives in the face of significant uncertainly. How do we learn to make reasonably good choices given our limited experience with this choice task? We point out that everyone performs a “life-cycle consumption and saving task,” which potentially creates an environment filled with opportunities for advice and observation. Perhaps individuals can incorporate the experiences of others, by speaking with them or observing their consumption choices, into her/his own decision making and learn to make better choices. It is this kind of “social learning,” or learning to make better individual decisions by observing others or communicating with others who have faced a similar choice task, that we study in the paper in which my talk is based.

The ESI is dedicated to understanding socioeconomic behavior, and I think our research falls neatly into this category, as we study how people interact, and use such interactions to improve their decision making skills in economic environments. "

Bio:
T. Parker Ballinger graduated with a B.A. in Economics from the University of Notre Dame in 1988. Upon graduation he was commissioned an officer in the U.S. Navy and served four years aboard the U.S.S. Nicholas (FFG-47) home ported in Charleston SC. During his tour, he participated in Operation Desert Storm and was awarded the Navy Commendation Medal with “V” for valor in combat. Ballinger then enrolled in the graduate program in Economics at the University of Houston, received his Ph.D., and joined the faculty at Stephen F. Austin State University in 1999. His research interest is primarily experimental economics. Also, he has a growing interest in applied time series econometrics.

Abstract:
We compare the power of individual learning (learning from one’s own experience) and social learning (learning from others’ experiences, either through observation or others’ advice) within the context of dynamic decision making under risk. We study the role of “demonstrability,” or the ease with which a solution to a complex problem can be explained to someone, and its effect on social learning. Specifically, are there differences in social learning when a problem is highly demonstrable compared to a problem that is not? We also examine the role advice plays within the context of demonstrability. Does written advice passed from one subject to another improve the performance of the reader and will demonstrability have an impact on the magnitude of the change in performance? Also, we examine how mentor incentives (for writing good advice) might affect social learning. Finally, we “grade” subject performance in solving a dynamic decision making problem. Does allowing subjects to view the grade of an earlier player under various conditions impact social learning?

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