The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment

Vladimir Novak (), Andrei Matveenko and Silvio Ravaioli ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We show that rational but inattentive agents can become polarized ex-ante. We present how optimal information acquisition, and subsequent belief formation, depend crucially on the agent-specific status quo valuation. Beliefs can systematically - in expectations over all possible signal realizations conditional on the state of the world - update away from the realized truth and even agents with the same initial beliefs might become polarized. We design a laboratory experiment to test the model’s predictions. The results confirm our predictions about the mechanism (rational information acquisition), its effect on beliefs (systematic polarization) and provide general insights into demand for information.

Keywords: Polarization; Beliefs Updating; Rational Inattention; Status Quo; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D72 D83 D84 D91 (search for similar items in EconPapers)
Pages: 72
Date: 2023-01
New Economics Papers: this item is included in nep-exp and nep-pol
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Related works:
Journal Article: The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment (2024)
Working Paper: The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2023_385

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