Dispersed Behavior and Perceptions in Assortative Societies

Frick, Mira; Iijima, Ryota; Ishii, Yuhta

doi:10.2139/ssrn.3165748

Cited by 13 publications

(22 citation statements)

References 89 publications

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“…However, there is one important difference with the fragility mechanism in the current paper: Whereas Theorem 1 relied on misperceptions for which SS(F,F ) consists of a single stateω, the present identification failure leads SS(q,q) to always include all states in Ω. Thus, determining which steady states beliefs converge to requires substantially different techniques, which we develop in Frick, Iijima, and Ishii (2019c). Using these techniques, we show that, similar to Theorem 1, arbitrarily small amounts of misperception can again lead the agent's belief to converge to a point mass on the same fixed statê ω, regardless of the true state ω (see Section 6.2 of Frick, Iijima, and Ishii, 2019c).…”

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 95%

“…In Section 4.3, we illustrated by looking at steady states, that single-agent learning does not become decoupled when the signal technology satisfies an identification assumption. Our companion paper, Frick, Iijima, and Ishii (2019c), analyzes learning dynamics in a general class of misspecified learning environments that nests single-agent active learning and presents formal belief-convergence results.…”

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

“…In Frick, Iijima, and Ishii (2019c), we highlight that such an identification failure, which we term "non-identification at point-mass beliefs" (NIP), is natural in costly information acquisition settings, where the agent may choose to stop acquiring information whenever he is confident in any given state. Observe that, under this identification failure, the set of steady states in (3) becomes…”

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

“…Thus, determining which steady states beliefs converge to requires substantially different techniques, which we develop in Frick, Iijima, and Ishii (2019c). Using these techniques, we show that, similar to Theorem 1, arbitrarily small amounts of misperception can again lead the agent's belief to converge to a point mass on the same fixed statê ω, regardless of the true state ω (see Section 6.2 of Frick, Iijima, and Ishii, 2019c). 47 Frick, Iijima, and Ishii (2019a) study the implications of such "assortativity neglect" in static coordination games.…”

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

“…The framework in Frick, Iijima, and Ishii (2019c) can also be applied to study the impact of misperceptions in such models. We again show that information aggregation is highly fragile and that vanishingly small amounts of misperception about others' characteristics can lead beliefs to converge to a state-independent point-mass.…”

Section: Social Learning With Public Action Observationsmentioning

confidence: 99%

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Misinterpreting Others and the Fragility of Social Learning

Frick¹,

Iijima²,

Ishii

2020

SSRN Journal

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We exhibit a natural environment, social learning among heterogeneous agents, where even slight misperceptions can have a large negative impact on long-run learning outcomes. We consider a population of agents who obtain information about the state of the world both from initial private signals and by observing a random sample of other agents' actions over time, where agents' actions depend not only on their beliefs about the state but also on their idiosyncratic types (e.g., tastes or risk attitudes). When agents are correct about the type distribution in the population, they learn the true state in the long run. By contrast, we show, first, that even arbitrarily small amounts of misperception about the type distribution can generate extreme breakdowns of information aggregation, where in the long run all agents incorrectly assign probability 1 to some fixed state of the world, regardless of the true underlying state. Second, any misperception of the type distribution leads long-run beliefs and behavior to vary only coarsely with the state, and we provide systematic predictions for how the nature of misperception shapes these coarse long-run outcomes. Third, we show that how fragile information aggregation is against misperception depends on the richness of agents' payoff-relevant uncertainty; a design implication is that information aggregation can be improved by simplifying agents' learning environment. The key feature behind our findings is that agents' belief-updating becomes "decoupled" from the true state over time. We point to other environments where this feature is present and leads to similar fragility results.

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Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 95%

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

Section: Single-agent Active Learning With Identification Failuresmentioning

confidence: 99%

Section: Social Learning With Public Action Observationsmentioning

confidence: 99%

See 3 more Smart Citations

Misinterpreting Others and the Fragility of Social Learning

Frick¹,

Iijima²,

Ishii

2020

SSRN Journal

Self Cite

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Echo Chambers and Their Effects on Economic and Political Outcomes

Levy

Razin

2019

Annu. Rev. Econ.

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In this review, we survey the economics literature on echo chambers. We identify echo chambers as arising from a combination of two phenomena: ( a) the choice of individuals to segregate with like-minded ones, i.e., the creation of chambers, and ( b) behavioral biases that induce polarization when individuals exchange beliefs in these chambers, i.e., the echo. We summarize the literatures on these two phenomena and suggest how to combine the two literatures to gain insights about the effects of echo chambers on economic and political outcomes. We end by suggesting pathways for future research and discussing policy interventions to alleviate echo chambers.

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The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

Pérez-Truglia

2020

American Economic Review

120

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In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer and poorer individuals. Using survey data from 1985–2013 and multiple identification strategies, we show that the higher transparency increased the gap in happiness between richer and poorer individuals by 29 percent, and it increased the life satisfaction gap by 21 percent. We provide back-of-the-envelope estimates of the importance of income comparisons, and discuss implications for the ongoing debate on transparency policies. (JEL D31, H24, I31, K34)

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Dispersed Behavior and Perceptions in Assortative Societies

Cited by 13 publications

References 89 publications

Misinterpreting Others and the Fragility of Social Learning

Misinterpreting Others and the Fragility of Social Learning

Echo Chambers and Their Effects on Economic and Political Outcomes

The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

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