Extreme Effects of Uncertainty on Social Learning: An Investigation of Endogenously Limited Communication, Skepticism, and Biased Beliefs

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This research project will use economic theory and experiments to study how uncertainty affects social learning and affects communication in networks. Social learning, such as those that occur in public health announcements, political advertising and government program announcements is extremely important for the functioning of a modern democratic society. Understanding factors that improves or impede social learning contributes to economic science as well to efficient policy making and therefore improve the living standards in open democratic societies. The proposed research consists of three interrelated projects. The first project investigates how uncertainty affects communication within and among groups; the second will study whether uncertainty affects the trust recipients put in the information they receive and how this affects communication, while the third project will study whether recipients of biased information change their beliefs in response to this biased information and pass those biases on to others. This research project will contribute to improving business communication, public policy debates, advertising and several applied areas of social learning as it provides guidance on how best to craft and communicate effective messages and what may impede effective social learning. The results of this research will extremely important especially in emergencies when clear communication is needed. The research project also involves training graduate students in cutting edge economic research methods, thus contributing to the US global leadership in high caliber economic research.This research project will use both theoretical modelling and field experiments to study how the introduction of noise affects communication in social networks. Specifically, the PIs will study how individuals in a network deal with noise and how this affects information aggregation and diffusion in social learning within a network. The proposed research consists of three parts. This first part will investigate how the introduction of uncertainty reduces endogenous communication in a way that accounts for the changing expected value of the information itself. The second project will study whether noise affects the trust agents place in the signals contained in the information they receive and how this affects communication. The model incorporate how intrapersonal and interpersonal beliefs (biases towards other groups) affect the transmission of information within a network. The third project will study whether recipients recognize biased (censored) information passed on to them and whether they incorporate these biases into their beliefs. The results of this research project will not only significantly contribute to the literature on social learning and network economics but also lead to improved social communication. The results will provide inputs into crafting better messaging in business, politics, economics, and public policy.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.