Information Sampling, Conformity and Collective Mistaken Beliefs

Abstract

Societies sometimes stick to the status quo instead of switching to superior technologies and institutions. Existing explanations often attribute this to a coordination failure due to payoff externalities: people may know that another alternative is superior but nobody has an incentive to switch unless many others do so. We show that a simple learning argument can provide an alternative explanation. When people learn about the alternatives from their own experiences but tend to adopt the behaviors of others, they will mistakenly learn to believe that a popular alternative is superior to a better, but unpopular alternative. Our model neither assumes that agents engage in motivated cognition nor that they transmit mistaken information to others. Rather, it emphasizes the role of a fundamental asymmetry in access to information about popular versus unpopular alternatives. Our model thus provides a novel, sampling-based, explanation of how conformity in behavior can lead to private acceptance.


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