By Abhijit Banerjee & Olivier Compte

NBER Working Paper No. 29897 (Apr 2022).

Issue Date: Apr 2022

We explore a model of non-Bayesian information aggregation in networks. Agents non-cooperatively choose among Friedkin-Johnsen type aggregation rules to maximize payoffs. The DeGroot rule is chosen in equilibrium if and only if there is noiseless information transmission...leading to consensus. With noisy transmission, while some disagreement is inevitable, the optimal choice of rule blows up disagreement: even with little noise, individuals place substantial weight on their own initial opinion in every period, which inflates the disagreement. We use this framework to think about equilibrium versus socially efficient choice of rules and its connection to polarization of opinions across groups.