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This paper experimentally studies whether individuals hold a first-orderbelief that others apply Bayes' rule to incorporate private information intotheir beliefs, which is a fundamental assumption in many Bayesian andnon-Bayesian social learning models. We design a novel experimental setting inwhich the first-order belief assumption implies that social information isequivalent to private information. Our main finding is that participants'reported reservation prices of social information are significantly lower thanthose of private information, which provides evidence that casts doubt on thefirst-order belief assumption. We also build a novel belief error model inwhich participants form a random posterior belief with a Bayesian posteriorbelief kernel to explain the experimental findings. A structural estimation ofthe model suggests that participants' sophisticated consideration of others'belief error and their exaggeration of the error both contribute to thedifference in reservation prices.

Belief Error and Non-Bayesian Social Learning: Experimental Evidence