Research Seminar MicroeconomicsSocial Connectivity, Correlation Neglect, and Media BiasPhilipp Denter (Universidad Carlos III de Madrid)

17 January 2019

The Microeconomics Research Seminar welcomes Philipp Denter (Universidad Carlos III de Madrid), who will present his work on

"Social Connectivity, Correlation Neglect, and Media Bias".
Place: Room 250, Allende-Platz 1

Hour: 17:15 - 18:45
We are looking forward to seeing you there!

Abstract
We develop a model of political persuasion in which citizens, who suffer from correlation neglect, communicate on social media before deciding on a political action. A biased newspaper that aims to persuade citizens to take a particular action sends them a message about a payoff-relevant state. Citizens observe the newspaper's message and share this information with their peers on a social network. Each citizen then uses the signals received from her peers to update her beliefs, treating the signals as independent, before choosing an action. We show that an increase in an individual's social connectivity leads the newspaper to send more biased messages. A consequence is that greater social media penetration can reduce welfare and increase polarization of beliefs in the society.