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Distrust in experts and the origins of disagreement

Ing-Haw Cheng and Alice Hsiaw

Journal of Economic Theory, 2022, vol. 200, issue C

Abstract: Why do individuals interpret the same information differently? We propose that individuals form beliefs following Bayes' Rule with one exception: when assessing the credibility of experts, they double-dip the data and use already-updated beliefs instead of their priors. This “pre-screening” mechanism explains why individuals jointly disagree about states of the world and the credibility of experts, why the ordering of signals and experts affects final beliefs, and when individuals over- or underreact to new information. In a trading game, pre-screening generates excessive speculation, bubbles, and crashes. Our theory provides a micro-foundation for why individuals disagree about how to interpret the same data.

Keywords: Disagreement; Polarization; Learning; Speculation; Bubbles (search for similar items in EconPapers)
JEL-codes: D83 D91 G41 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Distrust in Experts and the Origins of Disagreement (2018) Downloads
Working Paper: Distrust in Experts and the Origins of Disagreement (2017) Downloads
Working Paper: Distrust in Experts and the Origins of Disagreement (2016) Downloads
Working Paper: Distrust in Experts and the Origins of Disagreement (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:200:y:2022:i:c:s0022053121002180

DOI: 10.1016/j.jet.2021.105401

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