Finite languages, persuasion bias, and opinion fluctuations
Journal of Economic Behavior & Organization, 2018, vol. 149, issue C, 46-57
We propose a boundedly rational model of opinion formation in which agents are subject to persuasion bias and communicate via finite languages. Agents are organized in a social network and repeatedly update their beliefs based on coarse messages about their neighbors’ beliefs. We show that agents do not reach a consensus; instead, their beliefs keep fluctuating forever if different languages are present in their neighborhoods. In particular, we recover the classical result that under persuasion bias agents typically reach a consensus if there is a unique language in society, while small perturbations lead to fluctuations. Our approach provides and formalizes a possible mechanism to account for theories according to which storytelling may generate excessive confidence swings.
Keywords: Bounded rationality; Finite languages; Opinion fluctuations; Persistent disagreement; Persuasion bias; Social networks (search for similar items in EconPapers)
JEL-codes: D83 D85 Z13 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:149:y:2018:i:c:p:46-57
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