Abstract: Rational Overservational Learning

An extensive literature identifies how privately-informed rational people who observe the behavior of other privately-informed rational people with similar tastes may come to imitate those people, emphasizing when and how such imitation leads to inefficiency. This paper investigates not the efficiency but instead the behavior of fully rational observational learners. In virtually any setting apart from that most commonly studied in the literature, rational observational learners imitate only some of their predecessors and, in fact, frequently contradict both their private information and the prevailing beliefs that they observe. In settings that allow players to extract all relevant information about others' private signals from their actions, we identify necessary and sufficient conditions for rational observational learning to include "antiimitative" behavior, where, fixing other observed actions, a person regards a state of the world as less likely the more a predecessor's action indicates belief in that state.