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Fragility of asymptotic agreement under Bayesian learning

Author

Listed:
  • Acemoglu, Daron

    () (Department of Economics, MIT)

  • Chernozhukov, Victor

    () (Department of Economics, MIT)

  • Yildiz, Muhamet

    () (Department of Economics, MIT)

Abstract

Under the assumption that individuals know the conditional distributions of signals given the payoff-relevant parameters, existing results conclude that as individuals observe infinitely many signals, their beliefs about the parameters will eventually merge. We first show that these results are fragile when individuals are uncertain about the signal distributions: given any such model, vanishingly small individual uncertainty about the signal distributions can lead to substantial (non-vanishing) differences in asymptotic beliefs. Under a uniform convergence assumption, we then characterize the conditions under which a small amount of uncertainty leads to significant asymptotic disagreement.

Suggested Citation

  • Acemoglu, Daron & Chernozhukov, Victor & Yildiz, Muhamet, 2016. "Fragility of asymptotic agreement under Bayesian learning," Theoretical Economics, Econometric Society, vol. 11(1), January.
  • Handle: RePEc:the:publsh:436
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    References listed on IDEAS

    as
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    6. Daron Acemoglu & Victor Chernozhukov & Muhamet Yildiz, 2006. "Learning and Disagreement in an Uncertain World," NBER Working Papers 12648, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Antonio Jiménez-Martínez, 2015. "A model of belief influence in large social networks," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 21-59, May.
    2. Epstein, Larry G. & Seo, Kyoungwon, 2014. "De Finetti meets Ellsberg," Research in Economics, Elsevier, vol. 68(1), pages 11-26.
    3. Dicks, David & Fulghieri, Paolo, 2015. "Ambiguity, Disagreement, and Allocation of Control in Firms," CEPR Discussion Papers 10400, C.E.P.R. Discussion Papers.
    4. Alice Hsiaw & Ing-Haw Cheng, 2016. "Distrust in Experts and the Origins of Disagreement," Working Papers 110R3, Brandeis University, Department of Economics and International Businesss School, revised Mar 2018.
    5. Rajiv Sethi & Muhamet Yildiz, 2012. "Public Disagreement," American Economic Journal: Microeconomics, American Economic Association, vol. 4(3), pages 57-95, August.
    6. Mandler, Michael, 2012. "The fragility of information aggregation in large elections," Games and Economic Behavior, Elsevier, vol. 74(1), pages 257-268.
    7. Sandeep Baliga & Eran Hanany & Peter Klibanoff, 2013. "Polarization and Ambiguity," Discussion Papers 1558, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Stephen Morris & Muhamet Yildiz, 2016. "Crises: Equilibrium Shifts and Large Shocks," Working Papers 083_2016, Princeton University, Department of Economics, Econometric Research Program..
    9. Dani Rodrik, 2013. "When Ideas Trump Interests : Preferences, World Views, and Policy  Innovations," Working Papers id:5558, eSocialSciences.
    10. repec:bos:wpaper:wp2013-001 is not listed on IDEAS
    11. Matthew Gentzkow & Jesse M. Shapiro, 2011. "Ideological Segregation Online and Offline," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1799-1839.
    12. S. Nageeb Ali, 2011. "Learning Self-Control," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 857-893.
    13. Azomahou, T. & Opolot, D., 2014. "Beliefs dynamics in communication networks," MERIT Working Papers 034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Benoît, Jean-Pierre & Dubra, Juan, 2014. "A Theory of Rational Attitude Polarization," MPRA Paper 60129, University Library of Munich, Germany.
    15. Bohren, J. Aislinn, 2016. "Informational herding with model misspecification," Journal of Economic Theory, Elsevier, vol. 163(C), pages 222-247.
    16. Ceren Baysan, 2017. "Can More Information Lead to More Voter Polarization? Experimental Evidence from Turkey," 2017 Papers pba1551, Job Market Papers.
    17. Rajiv Sethi & Muhamet Yildiz, 2013. "Perspectives, Opinions, and Information Flows," Levine's Working Paper Archive 786969000000000934, David K. Levine.
    18. Gabaix, Xavier & Laibson, David & Li, Deyuan & Li, Hongyi & Resnick, Sidney & de Vries, Casper G., 2016. "The impact of competition on prices with numerous firms," Journal of Economic Theory, Elsevier, vol. 165(C), pages 1-24.
    19. Benoît, Jean-Pierre & Dubra, Juan, 2018. "When do populations polarize? An explanation," MPRA Paper 86173, University Library of Munich, Germany.
    20. de la Torre, Augusto & Ize, Alain, 2013. "The foundations of macroprudential regulation : a conceptual roadmap," Policy Research Working Paper Series 6575, The World Bank.
    21. Le Yaouanq, Yves, 2018. "A Model of Ideological Thinking," Rationality and Competition Discussion Paper Series 85, CRC TRR 190 Rationality and Competition.
    22. Kondor, Péter, 2011. "The more we know on the fundamental, the less we agree on the price," CEPR Discussion Papers 8455, C.E.P.R. Discussion Papers.
    23. Simsek, Alp, 2012. "Belief Disagreements and Collateral Constraints," Scholarly Articles 9561259, Harvard University Department of Economics.
    24. repec:fip:fedlrv:00085 is not listed on IDEAS
    25. Adriani, Fabrizio & Sonderegger, Silvia, 2009. "Trust, Introspection, and Market Participation: an Evolutionary Approach," MPRA Paper 16110, University Library of Munich, Germany.

    More about this item

    Keywords

    Asymptotic disagreement; Bayesian learning; merging of opinions;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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