The 162nd meeting jointly organized with International Public Policy Seminar
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Date | 2024.7.19 Fri 13:30 - 15:00 |
Venue |
Conference Room, 6th Floor, OSIPP Building |
Contact | Ms. Kitabayashi, Institute of Social Science, The University of Tokyo |
The Osaka Workshop on Economics of Institutions and Organizations, OEIO, meets every month to exchange research ideas on institutional and organizational economics. Participants include both people specialized in theoretical research and those in empirical research. Topics of meetings might be about microeconomic theory, macroeconomic theory, or economic history..., whatever on institutional and organizational economics.
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)
Abstract: 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.