Document Type

Conference Proceeding

Publication Date

2005

Source Publication

Southwest Institute 2005 Program and Proceedings

Abstract

Based on an assumption of one-way learning, Granato and Wong (2004) consider a framework with two groups of agents, Group L and Group H, where Group L is less "attentive" and uses the expectations of the more or highly "attentive" Group H to update their forecasts. The paper shows the "boomerang effect," which is defined as a situation where the inaccurate forecasts of a less attentive group confound a more attentive group's forecasts. This extended paper relaxes the one-way learning assumption and investigates the case that both groups are learning from each other, i.e., dual learning. Simulations suggest that a boomerang effect still exists. Surprisingly, although the highly attentive group has a full set of information to make forecasts, they still learn from Group L. The reason is that Group H adjusts their forecasts because there is available information in Group L's forecast measurement error.

Comments

Published version. Published as part of the proceedings of the conference, Southwest Institute 2005 Program and Proceedings, 2005: 258-268. Publisher link. © Decision Sciences Institute 2005. Used with permission.