Communication with Unknown Perspectives
60 Pages Posted: 12 Sep 2013 Last revised: 17 Jan 2016
Date Written: January 14, 2016
Consider a group of individuals with unobservable perspectives (subjective prior beliefs) about a sequence of states. In each period, each individual receives private information about the current state and forms an opinion (a posterior belief). She also chooses a target individual and observes the target's opinion. This choice involves a trade-off between well-informed targets, whose signals are precise, and well-understood targets, whose perspectives are well known. Opinions are informative about the target's perspective, so observed individuals become better understood over time. We identify a simple condition under which long-run behavior is history independent. When this fails, each individual restricts attention to a small set of experts and observes the most informed among these. A broad range of observational patterns can arise with positive probability, including opinion leadership and information segregation. In an application to areas of expertise, we show how these mechanisms generate own-field bias and large field dominance.
Keywords: Beliefs, Heterogeneous Priors, Network Formation, Opinion Leadership, Segregation
JEL Classification: D82, D83, D85
Suggested Citation: Suggested Citation