Games and Economic Behavior 42 (2003) 116–136 www.elsevier.com/locate/geb

Learning by not doing: an experimental investigation of observational learning
Antonio Merlo a,c and Andrew Schotter b,∗ a Department of Economics, University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104, USA b Department of Economics, New York University, 269 Mercer Street, New York, NY 10003, USA c CEPR, UK

Received 6 September 2000

Abstract We present experimental evidence suggesting that observational learning (i.e., learning-by-notdoing but by observing) may outperform learning-by-doing.  2002 Elsevier Science (USA). All rights reserved.
JEL classification: C91; D83 Keywords: Learning

1. Introduction Common sense might suggest that if two identical rational economic agents who are attempting to maximize the same objective function have the same data or information set at their disposal, they will make the same choice. Perhaps for this reason it is hardly ever asked whether the process through which this data was generated matters or is it sufficient to merely know the stock of information the agents have in their possession at the time the choice is made. This question is clearly important for many economic situations. For example, think of an environment where a task is repeatedly performed and the expertise of the decision maker increases as a function of the cumulative stock of output produced as in a learning-by-doing environment. In such an environment, does the stock of observations generated along the way summarize all the information needed to make efficient economic
* Corresponding author.

E-mail addresses: merloa@econ.upenn.edu (A. Merlo), andrew.schotter@nyu.edu (A. Schotter). 0899-8256/02/$ – see front matter  2002 Elsevier Science (USA). All rights reserved. doi:10.1016/S0899-8256(02)00537-7

A. Merlo, A. Schotter / Games and Economic Behavior 42 (2003)