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)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053121002180
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Distrust in Experts and the Origins of Disagreement (2018) ![Downloads](/downloads_econpapers.gif)
Working Paper: Distrust in Experts and the Origins of Disagreement (2017) ![Downloads](/downloads_econpapers.gif)
Working Paper: Distrust in Experts and the Origins of Disagreement (2016) ![Downloads](/downloads_econpapers.gif)
Working Paper: Distrust in Experts and the Origins of Disagreement (2016) ![Downloads](/downloads_econpapers.gif)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:200:y:2022:i:c:s0022053121002180
DOI: 10.1016/j.jet.2021.105401
Access Statistics for this article
Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell
More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).