Learning Source Biases: Multi-sourced Misspecifications and Consequences
We study how a decision maker (DM) learns about the biases of unfamiliar information sources. Absent any friction, a rational DM uses familiar sources as yardsticks to discern the true bias of a source. If the DM has misspecified beliefs, this process fails. We derive long-run beliefs, behavior, welfare, and corresponding comparative statics when the DM holds dogmatic, incorrect beliefs about the biases of several familiar sources. The distortion due to misspecified learning aggregates misspecifications associated with familiar sources independently of sources the DM learns about. This has implications for labor market discrimination, media bias, and project finance and oversight.
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