Most economic models have no reason to introduce learning because agents are assumed to solve the relevant problem correctly on trial one. When learning is explicitly introduced, Homo Economicus (hereafter abbreviated HE, with no gender inference intended) is typically taken to be a quick study.
If, perchance, HE makes an error, HE quickly learns to correct it. However, the students I have taught over the years, even at our best universities such as Cornell, MIT, and Chicago, are a little slower on the uptake. Even after hearing what is, to my unbiased view, a completely clear explanation, they still often make a mistake in applying a concept if the context is slightly disguised. This is why putting a question about the first part of the course on an exam covering the later part of the course is considered so unfair by the students
. The problem with many economic models of learning is that they seem to apply to a very static environment. In fact, such models seem to be directly applicable only to the situation in which Bill Murray finds himself in the movie Ground Hog Day.[1] In that movie, Bill Murray is a TV weatherman sent to report on whether the groundhog sees his shadow on Feb. 2. Murray’s character ends up reliving the same day over and over again. Although he is a slow learner, the opportunity to rerun the same day repeatedly, and to learn from the consequences of his actions each time, creates a controlled experiment in which he is able to learn many things eventually, from how to prevent accidents to how to play the piano. Alas, life is not like Ground Hog Day.
In life, each day is different, and the most important of life’s decisions, such as choosing a career or spouse, offer only a few chances for learning! I predict that economic models of learning will become more sophisticated by making their agents less sophisticated and giving greater weight to the role of environmental factors, such as the difficulty of the task and the frequency of feedback, in determining the speed of learning. This means that models of saving for retirement (a hard problem with few opportunities for learning) should be very different from models of frequency of milk purchases (easier, with many learning chances).
1 The idea that economic models of learning are similar to this movie evolved during a conversation I had with Colin Camerer during a Russell Sage Foundation summer institute on behavioral economics. It is a safe bet that we each think it was our idea.
Prof. Richard H. Thaler
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