Abstract
The paper analyzes two-person decision-making problems where information is asymmetric. A model is proposed in which information is revealed according to a social norm, whereby more confidently expressed arguments signal better information, and it is shown that efficient revelation of information can take place, and decision-making is based on expressed confidence (“the confidence heuristic”). This process leads to group polarization. The model is generalized to take account of the possibility that some individuals may act irrationally or in a prejudiced manner. If the number of prejudiced individuals in the population is sufficiently large, then the norm will break down.
| Original language | English |
|---|---|
| Pages (from-to) | 97-113 |
| Number of pages | 17 |
| Journal | Journal of Economic Psychology |
| Volume | 16 |
| Issue number | 1 |
| Publication status | Published - Mar 1995 |