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The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment

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  • Vladimír Novák
  • Andrei Matveenko
  • Silvio Ravaioli

Abstract

We show that rational but inattentive agents can become polarized ex ante. We present how optimal information acquisition and subsequent belief formation depend crucially on the agent-specific status quo valuation. Beliefs can systematically—in expectations over all possible signal realizations conditional on the state of the world—update away from the realized truth, and even agents with the same initial beliefs might become polarized. We design a laboratory experiment to test the model's predictions. The results confirm our predictions about the mechanism (rational information acquisition) and its effect on beliefs (systematic polarization), and they provide general insights into demand for information.

Suggested Citation

  • Vladimír Novák & Andrei Matveenko & Silvio Ravaioli, 2024. "The Status Quo and Belief Polarization of Inattentive Agents: Theory and Experiment," American Economic Journal: Microeconomics, American Economic Association, vol. 16(4), pages 1-39, November.
    • Handle: RePEc:aea:aejmic:v:16:y:2024:i:4:p:1-39
    DOI: 10.1257/mic.20210352
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    3. Sergei Mikhalishchev & Vladimir Novak, 2024. "Inattention, Stability, and Reform Reluctance," Working and Discussion Papers WP 8/2024, Research Department, National Bank of Slovakia.

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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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