Networks Webinar - Xu Tan

Abstract:

Finite players allocate limited attention capacities between biased primary sources and other players in order to gather information about an uncertain state.  The resulting Poisson attention network transmits information from primary sources to a player either directly or indirectly through the other players.  Rational inattention generates heterogeneous demands for information among players with heterogeneous preferences. In an echo-chamber equilibrium, each player restricts attention to his own-biased source and like-minded friends, who, by attending to the same primary source as his, serve as secondary sources in case the information transmission from the primary source to him is disrupted. We examine when and why echo-chamber equilibria would arise, and why mandatorily exposing players to all biased sources could dissolve  echo chambers but undermine welfare. We characterize the attention network within an echo chamber, establishing the law of the few  and pointing to the controversy of policy interventions that augment information source visibility.