An Experimental Test of Advice and Social Learning

Social learning is a process in which individuals learn by observing the actions of others. The odd aspect of the social learning literature is that, ironically, it is not very social since in the real world, while people learn by observing the actions of others, they also learn from their advice (word-of-mouth social learning). This paper introduces advice giving into a standard social learning problem. We designed the experiment so that both pieces of information, action and advice, should, in equilibrium, be equally informative (in fact, identical). In the laboratory, in contrast, subjects are more willing to follow the advice given to them by their predecessor than to copy their action and their behavior is more consistent with the prediction of the theory. Consequently, advice is both more informative and Pareto improving.