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Ryota Iijima Publications

Publish Date
Review of Economic Studies
Abstract

We present an approach to analyse learning outcomes in a broad class of misspecified environments, spanning both single-agent and social learning. We introduce a novel “prediction accuracy” order over subjective models and observe that this makes it possible to partially restore standard martingale convergence arguments that apply under correctly specified learning. Based on this, we derive general conditions to determine when beliefs in a given environment converge to some long-run belief either locally or globally (i.e. from some or all initial beliefs). We show that these conditions can be applied, first, to unify and generalize various convergence results in previously studied settings. Second, they enable us to analyse environments where learning is “slow”, such as costly information acquisition and sequential social learning. In such environments, we illustrate that even if agents learn the truth when they are correctly specified, vanishingly small amounts of misspecification can generate extreme failures of learning.

American Economic Review
Abstract

We formulate a model of social interactions and misinferences by agents who neglect assortativity in their society, mistakenly believing that they interact with a representative sample of the population. A key component of our approach is the interplay between this bias and agents' strategic incentives. We highlight a mechanism through which assortativity neglect, combined with strategic complementarities in agents' behavior, drives up action dispersion in society (e.g., socioeconomic disparities in education investment). We also suggest that the combination of assortativity neglect and strategic incentives may be relevant in understanding empirically documented misperceptions of income inequality and political attitude polarization.

Discussion Paper
Abstract

We study which multi-agent information structures are more effective at eliminating both first-order and higher-order uncertainty, and hence at facilitating efficient play in incomplete-information coordination games. We consider a learning setting à la Cripps, Ely, Mailath, and Samuelson (2008) where players have access to many private signal draws from an information structure. First, we characterize the rate at which players achieve approximate common knowledge of the state, based on a simple learning efficiency index. Notably, this coincides with the rate at which players’ first-order uncertainty vanishes, as higher-order uncertainty becomes negligible relative to first-order uncertainty after enough signal draws. Based on this, we show that information structures with higher learning efficiency induce more efficient equilibrium outcomes in coordination games that are played after sufficiently many signal draws. We highlight some robust

Discussion Paper
Abstract

We study settings in which, prior to playing an incomplete information game, players observe many draws of private signals about the state from some information structure. Signals are i.i.d. across draws, but may display arbitrary correlation across players. For each information structure, we define a simple learning efficiency index, which only considers the statistical distance between the worst-informed player’s marginal signal distributions in different states. We show, first, that this index characterizes the speed of common learning (Cripps, Ely, Mailath, and Samuelson, 2008): In particular, the speed at which players achieve approximate common knowledge of the state coincides with the slowest player’s speed of individual learning, and does not depend on the correlation across players’ signals. Second, we build on this characterization to provide a ranking over information structures: We show that, with sufficiently many signal draws, information structures with a higher learning efficiency index lead to better equilibrium outcomes, robustly for a rich class of games and objective functions that are “aligned at certainty.” We discuss implications of our results for constrained information design in games and for the question when information structures are complements vs. substitutes.

Discussion Paper
Abstract

We study settings in which, prior to playing an incomplete information game, players observe many draws of private signals about the state from some information structure. Signals are i.i.d. across draws, but may display arbitrary correlation across players. For each information structure, we define a simple learning efficiency index, which only considers the statistical distance between the worst-informed player’s marginal signal distributions in different states. We show, first, that this index characterizes the speed of common learning (Cripps, Ely, Mailath, and Samuelson, 2008): In particular, the speed at which players achieve approximate common knowledge of the state coincides with the slowest player’s speed of individual learning, and does not depend on the correlation across players’ signals. Second, we build on this characterization to provide a ranking over information structures: We show that, with sufficiently many signal draws, information structures with a higher learning efficiency index lead to better equilibrium outcomes, robustly for a rich class of games and objective functions. We discuss implications of our results for constrained information design in games and for the question when information structures are complements vs. substitutes.

Discussion Paper
Abstract

We study robust welfare comparisons of learning biases, i.e., deviations from correct Bayesian updating. Given a true signal distribution, we deem one bias more harmful than another if it yields lower objective expected payoffs in all decision problems. We characterize this ranking in static (one signal) and dynamic (many signals) settings. While the static characterization compares posteriors signal-by-signal, the dynamic characterization employs an “efficiency index” quantifying the speed of belief convergence. Our results yield welfare-founded quantifications of the severity of well-documented biases. Moreover, the static and dynamic rankings can disagree, and “smaller” biases can be worse in dynamic settings.

Discussion Paper
Abstract

We study robust welfare comparisons of learning biases, i.e., deviations from correct Bayesian updating. Given a true signal distribution, we deem one bias more harmful than another if it yields lower objective expected payoffs in all decision problems. We characterize this ranking in static (one signal) and dynamic (many signals) settings. While the static characterization compares posteriors signal-by-signal, the dynamic characterization employs an “efficiency index” quantifying the speed of belief convergence. Our results yield welfare-founded quantifications of the severity of well-documented biases. Moreover, the static and dynamic rankings can conflict, and “smaller” biases can be worse in dynamic settings. 

Discussion Paper
Abstract

We show how incorporating Gilboa, Maccheroni, Marinacci, and Schmeidler’s (2010) notion of objective rationality into the alpha-MEU model of choice under ambiguity (Hurwicz, 1951) can overcome several challenges faced by the baseline model without objective rationality. The decision-maker (DM) has a subjectively rational preference $\succsim^\wedge$, which captures the complete ranking over acts the DM expresses when forced to make a choice; in addition, we endow the DM with a (possibly incomplete) objectively rational preference $\succsim^*$, which captures the rankings the DM deems uncontroversial. Under the objectively founded alpha-MEU model, $\succsim^\wedge$ has an alpha-MEU representation and $\succsim^*$ has a unanimity representation à la Bewley (2002), where both representations feature the same utility index and set of beliefs. While the axiomatic foundations of the baseline alpha-MEU model are still not fully understood, we provide a simple characterization of its objectively founded counterpart. Moreover, in contrast with the baseline model, the model parameters are uniquely identified. Finally, we provide axiomatic foundations for prior-by-prior Bayesian updating of the objectively founded alpha-MEU model, while we show that, for the baseline model, standard updating rules can be ill-defined.

Discussion Paper
Abstract

We show how incorporating Gilboa, Maccheroni, Marinacci, and Schmeidler’s (2010) notion of objective rationality into the α-MEU model of choice under ambiguity can overcome several challenges faced by the baseline model without objective rationality. The decision-maker (DM) has a subjectively rational preference ≿^, which captures the complete ranking overacts the DM expresses when forced to make a choice; in addition, we endow the DM with a (possibly incomplete) objectively rational preference ≿*, which captures the rankings the DM deems uncontroversial. Under the objectively founded α-MEU model, ≿^ has an α-MEU representation and ≿*has a unanimity representation à la Bewley (2002), where both representations feature the same utility index and set of beliefs. While the axiomatic foundations of the baseline α-MEU model are still not fully understood, we provide a simple characterization of its objectively founded counterpart. Moreover, in contrast with the baseline model, the model parameters are uniquely identified. Finally, we provide axiomatic foundations for prior-by-prior Bayesian updating of the objectively founded α-MEU model, while we show that, for the baseline model, standard updating rules can be ill-defined.

Discussion Paper
Abstract

We present an approach to analyze learning outcomes in a broad class of misspecified environments, spanning both single-agent and social learning. We introduce a novel “prediction accuracy” order over subjective models, and observe that this makes it possible to partially restore standard martingale convergence arguments that apply under correctly specified learning. Based on this, we derive general conditions to determine when beliefs in a given environment converge to some long-run belief either locally or globally (i.e., from some or all initial beliefs). We show that these conditions can be applied, first, to unify and generalize various convergence results in previously studied settings. Second, they enable us to analyze environments where learning is “slow,” such as costly information acquisition and sequential social learning. In such environments, we illustrate that even if agents learn the truth when they are correctly specified, vanishingly small amounts of misspecification can generate extreme failures of learning.

Discussion Paper
Abstract

We present an approach to analyze learning outcomes in a broad class of misspecified environments, spanning both single-agent and social learning. We introduce a novel “prediction accuracy” order over subjective models, and observe that this makes it possible to partially restore standard martingale convergence arguments that apply under correctly specified learning. Based on this, we derive general conditions to determine when beliefs in a given environment converge to some long-run belief either locally or globally (i.e., from some or all initial beliefs). We show that these conditions can be applied, first, to unify and generalize various convergence results in previously studied settings. Second, they enable us to analyze environments where learning is “slow,” such as costly information acquisition and sequential social learning. In such environments, we illustrate that even if agents learn the truth when they are correctly specified, vanishingly small amounts of misspecification can generate extreme failures of learning.

Discussion Paper
Abstract

We present an approach to analyze learning outcomes in a broad class of misspecified environments, spanning both single-agent and social learning. Our main results provide general criteria to determine—without the need to explicitly analyze learning dynamics—when beliefs in a given environment converge to some long-run belief either locally or globally (i.e., from some or all initial beliefs). The key ingredient underlying these criteria is a novel “prediction accuracy” ordering over subjective models that refines existing comparisons based on Kullback-Leibler divergence. We show that these criteria can be applied, first, to unify and generalize various convergence results in previously studied settings. Second, they enable us to identify and analyze a natural class of environments, including costly information acquisition and sequential social learning, where unlike most settings the literature has focused on so far, long-run beliefs can fail to be robust to the details of the true data generating process or agents’ perception thereof. In particular, even if agents learn the truth when they are correctly specified, vanishingly small amounts of misspecification can lead to extreme failures of learning.