Why Echo Chambers Are Useful

Why do people appear to forgo information by sorting into “echo chambers”? We model a society in which information is dispersed and preferences are polarized. Segregation into small, homogeneous groups can then be individually rational and Pareto-efficient, as it maximizes the amount of communication that takes place. We examine the optimal communication structure and give sufficient conditions for when it is attainable through endogenous group formation. A major problem is that people tend to segregate inefficiently little. Using data from Twitter, we show several behavioral patterns that are consistent with the results of our model.

Joint with Christoph Schottmüller

Recording: To view the seminar recording, click here