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Keywords:Heterogeneous Confidence 

Working Paper
Differences of Opinions

This paper presents a generalization of the DeGroot learning rule in which social learning can lead to polarization, even for connected networks. I first develop a model of biased assimilation in which the utility an agent receives from past decisions depends on current beliefs when uncertainty is slow to resolve. I use this model to motivate key features of an agent?s optimization problem subject to scarce private information, which forces the agent to extrapolate using social information. Even when the agent extrapolates under ?scientific? assumptions and all individuals in the network ...
Working Papers (Old Series) , Paper 1604

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