Linde Institute/SISL Seminar: Cole Williams, UC Irvine
Abstract: Social learning and rational disagreement have been studied in environments in which agents are either homogeneous or the distribution of types is known. We study social learning under unobserved heterogeneity, where the distribution of types is unknown and is itself the subject of learning. This dual learning process unlocks a number of new results. Rational agents display confirmation bias. Learning is local: individuals place greater weight on opinions closer to their own and rationally discount more divergent views. Not only is there asymptotic disagreement, but social learning can polarize beliefs. Dual learning also provides a basis for social identification and group formation. We explore applications to political opinion formation, extremist behavior, and choice of news media.