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Inattention and belief polarization

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  • Nimark, Kristoffer P.
  • Sundaresan, Savitar
Abstract
Disagreement persists over issues that have objective truths. In the presence of increasing amounts of data, such disagreement should vanish, but it is nonetheless observable. This paper studies persistent disagreement in a model where rational Bayesian agents learn about an unobservable state of the world through noisy signals. We show that agents (i) choose signal structures that are more likely to reinforce their prior beliefs and (ii) choose less informative signals when their prior beliefs are more precise. For sufficiently precise beliefs, agents choose completely uninformative signals. We call the former the confirmation effect and the latter the complacency effect. Taken together, the two effects imply that the beliefs of ex ante identical agents over time can cluster in two distinct groups at opposite ends of the belief space. The complacency effect holds uniformly when information cost is proportional to channel capacity, but not when cost is proportional to reduction in entropy.

Suggested Citation

  • Nimark, Kristoffer P. & Sundaresan, Savitar, 2019. "Inattention and belief polarization," Journal of Economic Theory, Elsevier, vol. 180(C), pages 203-228.
    • Handle: RePEc:eee:jetheo:v:180:y:2019:i:c:p:203-228
    DOI: 10.1016/j.jet.2018.12.007
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    Cited by:

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    2. Cheng, Ing-Haw & Hsiaw, Alice, 2022. "Distrust in experts and the origins of disagreement," Journal of Economic Theory, Elsevier, vol. 200(C).
    3. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.
    4. Luca Gambetti & Nicolò Maffei-Faccioli & Sarah Zoi, 2022. "Bad News, Good News: Coverage and Response Asymmetries," Working Paper 2022/8, Norges Bank.
    5. Pavel Ilinov & Andrei Matveenko & Maxim Senkov & Egor Starkov, 2022. "Optimally Biased Expertise," CERGE-EI Working Papers wp736, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. Gabriel Martinez & Nicholas H. Tenev, 2020. "Optimal Echo Chambers," Papers 2010.01249, arXiv.org, revised Feb 2024.
    7. Ramana Nanda, "undated". "Priors, Experiments, Learning and Persuasion in (Bayesian) Entrepreneurial Finance," Harvard Business School Working Papers 25-020, Harvard Business School.
    8. Ethan Struby & Christina Farhart, 2024. "Inflation Expectations and Political Polarization: Evidence from the Cooperative Election Study," Working Papers 2024-01, Carleton College, Department of Economics.

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    More about this item

    Keywords

    Rational inattention; Beliefs; Disagreement; Rational Bayesian agents; Filter bubbles; Polarization;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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