# Diversity and Exploration in Social Learning

## TL;DR

This paper investigates how diversity in subjective scores affects social utility in sequential consumer search, showing that moderate diversity optimizes overall utility by balancing exploration and learning.

## Contribution

It introduces a model linking diversity levels to search behavior and quantifies the optimal diversity for maximizing social utility in correlated value settings.

## Key findings

- Intermediate diversity levels improve social utility.
- Extreme diversity or no diversity reduces utility.
- The impact varies with search duration.

## Abstract

In consumer search, there is a set of items. An agent has a prior over her value for each item and can pay a cost to learn the instantiation of her value. After exploring a subset of items, the agent chooses one and obtains a payoff equal to its value minus the search cost. We consider a sequential model of consumer search in which agents' values are correlated and each agent updates her priors based on the exploration of past agents before performing her search. Specifically, we assume the value is the sum of a common-value component, called the quality, and a subjective score. Fixing the variance of the total value, we say a population is more diverse if the subjective score has a larger variance. We ask how diversity impacts average utility. We show that intermediate diversity levels yield significantly higher social utility than the extreme cases of no diversity (when agents under-explore) or full diversity (when agents are unable to learn from each other) and quantify how the impact of the diversity level changes depending on the time spent searching.