Micro Seminars EUR

Speaker(s)
Ronny Razin (The London School of Economics, United Kingdom)
Date
Friday, October 30, 2015
Location
Rotterdam

We suggest a new framework to analyse individuals’ perceptions of correlation in group communication, and its effect on behaviour. The premise of the model is that individuals have different perceptions about the level of correlation in the joint distribution governing the information sources of group members. As individuals do not know exactly what the joint distribution of information is, their inferences upon hearing others’ information involve sets of “rationalisable” beliefs. In a simple model with truthful communication we fully characterise the set of possible inferences that individuals can make for different perceptions of correlation. We suggest a comparative measure of the perception of correlation and show that lower perception of correlation is associated with less ambiguity. We study the behavioral implications of the model and of ambiguity aversion to risky and cautious shifts in groups, jury deliberation, and information diffusion in networks. (Coauthor G. Levy.)