A THEORY OF LEARNING WITH HETEROGENEOUS AGENTS

We study learning in organizations comprised of short-lived agents wit h heterogeneous beliefs. It is shown that the sequence of actions conv erges in probability to the set of ex-post optimal actions. Under some identifiability conditions, beliefs also converge in probability to p oint mass on the truth. Moreover, while actions and posterior beliefs converge in probability, they can simultaneously almost surely fail to converge. Our simulations of Kiefer's 1989 monopoly learning model su ggest that if the firm is operated by a sequence of short-lived manage rs with heterogeneous beliefs then complete learning of the demand cur ve obtains.