arXiv subjects

Benson Tsz Kin Leung

Publications and source records attributed to Benson Tsz Kin Leung.

4 recordsLinked to original sources

arXiv2026

Learning in a Small/Big World

Complexity and limited ability affect how we learn and make decisions under uncertainty. Using finite automata to model belief formation, this paper studies the characteristics of optimal learning behavior in small and big worlds, where the complexity of the environment is low and high, respectively, relative to the cognitive ability of the decision maker. The optimal long-run average payoff and distribution of actions are well approximated by the Bayesian benchmark in very small worlds, but the gap widens as the worlds get bigger. In big worlds, it can be optimal for the decision maker to ignore some states entirely, concentrating limited cognitive resources on a subset of states. This ``optimal ignorance'' is reminiscent of well-documented non-Bayesian learning patterns such as the use of heuristics, correlation neglect, and inattentive learning. The results establish a relationship between complexity, cognitive ability, and the scope for non-Bayesian learning behavior.

econ.TH↗

arXiv2026

Memory Manipulation

We study persuasion that works through memory: a manipulator alters the probabilities with which a Bayesian decision-maker recalls the signals he has received. The decision-maker corrects for the elevated or reduced probabilities of recalling different signals, and this correction disciplines what manipulation can achieve. Manipulation cannot move the average posterior. It backfires on decision-makers with few memories, whose sparse recall is evidence against the favored state, yet it is effective on those with many, who can be led to arbitrarily confident beliefs in the wrong state. It thickens the right tail of the belief distribution and, under Poisson memory, lowers its hazard rate. In a monopoly pricing application, the seller manipulates memory retrieval at high prices, and manipulation in turn raises the optimal price. In a narrative persuasion application, memory manipulation reduces information provision and creates echo chambers.

econ.TH↗

arXiv2023

Innovation Diffusion among Case-based Decision-makers

This paper analyzes a model of innovation diffusion with case-based individuals a la Gilboa and Schmeidler (1995,1996,1997), who decide whether to consume an incumbent or a new product based on their and their social neighbors' previous consumption experiences. I analyze how diffusion pattern changes with individual characteristics, innovation characteristics and social network. In particular, radical innovation leads to higher initial speed but lower acceleration compared to increment innovation. Social network with stronger overall social tie, lower degree of homophily or higher exposure of reviews from early adopters speed up diffusion of innovation.

econ.TH↗

arXiv2020

Competition, Politics, & Social Media

An increasing number of politicians are relying on cheaper, easier to access technologies such as online social media platforms to communicate with their constituency. These platforms present a cheap and low-barrier channel of communication to politicians, potentially intensifying political competition by allowing many to enter political races. In this study, we demonstrate that lowering costs of communication, which allows many entrants to come into a competitive market, can strengthen an incumbent's position when the newcomers compete by providing more information to the voters. We show an asymmetric bad-news-good-news effect where early negative news hurts the challengers more than the positive news benefit them, such that in aggregate, an incumbent politician's chances of winning is higher with more entrants in the market. Our findings indicate that communication through social media and other platforms can intensify competition, how-ever incumbency advantage may be strengthened rather than weakened as an outcome of higher number of entrants into a political market.

econ.GN↗