Information Contagion Within Social Networks in the Presence of Confirmatory Bias

Abstract

This paper examines the impact of confirmatory bias as it modifies the way in which information is disseminated within a small world network. A small world network is used as it has many of the characteristics found in social networks. Agents receive a private signal on the state of the world which is then adjusted following discussions with neighbours in a manner consistent with the social learning literature. It is found that the presence of confirmatory bias decreases the speed at which agents learn of changes in the state of the world and increases the level of memory in the system. When individuals suffer extreme levels of the bias, information cascades can emerge leading to longterm misalignment between the majority view of agents and the true state of the world.