Echo Chambers: Social Learning under Unobserved Heterogeneity

People are often more influenced by opinions similar to their own and even seek information from those with whom they expect to most agree—behaviours often attributed to irrational biases. In this paper, I argue that these behaviours can be understood within the context of rational social learning by accounting for the presence of unobserved heterogeneity in preferences or priors. Individuals display local learning by placing greater weight on opinions that are closer to their own. When individuals choose whom to learn from, local learning leads to the development of echo chambers.