Osaka Workshop on Economics of Institutions and Organization (#162)

Date:  Friday, July 19, 2024 13:30 to 15:00
Place:  Lecture Theater on the 2nd floor, OSIPP Building, Toyonaka Campus, Osaka University.　　　　
　　 （※The room has been changed.）
Registration:  E-mail to Ms. Kitabayashi 【[encode]yuri-kitabayashi(a)iss.u-tokyo.ac.jp[/encode] 】
　　　　　　 (The reply may be sent on the day of the event.)

Presenter:
Junichiro Ishida
(Institute of Social and Economic Research, Osaka University)

Title: “Optimal Feedback Dynamics Against Free-Riding in Collective Experimentation” 
           (with Chia-Hui Chen, Hulya Eraslan and Takuro Yamashita)
[su_quote cite=”Abstract: Junichiro Ishida”]

We consider a dynamic model in which a principal decides what information to release about a product of unknown quality (e.g., a vaccine) to incentivize agents to experiment with the product. Assuming that the agents are long-lived and forward-looking, their incentive to wait and see other agents’ experiences poses a significant obstacle to social learning. We show that the optimal feedback mechanism to mitigate information free-riding takes a strikingly simple form: the principal recommends adoption as long as she observes no bad news, but only with some probability; once she does not recommend at some point, she stays silent forever after that. Our analysis suggests the optimality of premature termination, which in turn implies that: (i) false positives (termination in the good state) are more acceptable than false negatives (continuation in the bad state); (ii) overly cautious mechanisms that are biased toward termination can be welfare-enhancing. 

[/su_quote]

• 共催：東京大学社会科学研究所 & IPP研究会
• 問合せ： 東京大学社会科学研究所 中林真幸研究室