Decision Making and Learning in a Globalizing World

Tinbergen Institute Discussion Paper 10-034/1

46 Pages Posted: 25 Mar 2010

See all articles by Otto H. Swank

Otto H. Swank

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Bauke Visser

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Date Written: March 19, 2010

Abstract

We study two aspects of globalization. It allows a decision-maker to go beyond his own local experience and to learn from other decision-makers in addressing common problems. This improves the identification and diffusion of best practices. It also provides extra information to 'markets' that evaluate decision-makers: comparisons become possible. We identify conditions under which the globalization of markets helps or hurts (i) the communication among decision-makers about their own experience and (ii) the quality of the decision that is taken next. An important mediating factor is whether decision-making is centralized or decentralized.

Keywords: centralization, decentralization, learning, cheap talk, reputational concerns, globalization, policy diffusion

JEL Classification: D83, D70, D02

Suggested Citation

Swank, Otto H. and Visser, Bauke, Decision Making and Learning in a Globalizing World (March 19, 2010). Tinbergen Institute Discussion Paper 10-034/1, Available at SSRN: https://ssrn.com/abstract=1574785 or http://dx.doi.org/10.2139/ssrn.1574785

Otto H. Swank (Contact Author)

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081448 (Phone)
+31 10 2120551 (Fax)

Bauke Visser

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+ 31 (0)10 40 81449 (81441) (Phone)
+ 31 (0)10 40 89149 (Fax)

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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