Strategic Communication under Persuasion Bias in Social Networks
40 Pages Posted: 27 May 2015
Date Written: May 08, 2015
We investigate the role of conflicting interests in a boundedly rational model of belief dynamics. Individuals have different preferences about the action to take, are subject to persuasion bias and repeatedly communicate with their neighbors in a social network. They communicate strategically to influence the others' beliefs in their favor: the sender sends a noisy message containing information about his belief, the receiver interprets the sent message and updates her belief by adopting the average of the interpretation and her pre-meeting belief. First, we establish that persuasion bias implies constant meanings of messages over time. Next, we show that the agents no longer reach a mutual consensus and instead their beliefs keep fluctuating forever. In particular, convergence to consensus is not stable with respect to the introduction of conflicts of interest. Furthermore, comparative simulations reveal that the variance of the beliefs increases with the magnitude of the conflicts, implying that smaller conflicts lead to more homogeneous beliefs in society.
Keywords: Social networks, strategic communication, persuasion bias, conflict of interest, persistent disagreement, belief fluctuations
JEL Classification: C72, D74, D83, D85, Z13
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