How Do People Learn by Listening to Others? Experimental Evidence from Thailand

This paper presents experimental evidence about how individuals learn from information that comes from inside versus outside their ethnic group. In the experiment, Thai subjects observed information that came from Americans and other Thais that they could use to help them answer a series of questions. Two main findings emerge. First, subjects display overconfidence in their own opinions and place too low a value on the information that they observe. Second, conditional on this overconfidence, subjects weigh American information relative to Thai information in a nearly optimal way. The data also indicates that subjects appear to understand that outside information has extra value because people from different groups know different things and so have an opportunity to learn from each other.