Utilitarian Beliefs in Social Networks: Explaining the Emergence of Hatred

Abstract

We study the dynamics of opinions in a setting where a leader has a payoff that depends on agents' beliefs and where agents derive psychological utility from their beliefs. Agents sample a signal that maximises their utility and then communicate with each other through a network formed by disjoint social groups. The leader has a choice to target a finite set of social groups with a specific signal to influence their beliefs and maximise his returns. Heterogeneity in agents' preferences allows us to analyse the evolution of opinions as a dynamical system with asymmetric forces. We apply our model to explain the emergence of hatred and the spread of racism in a society. We show that when information is restricted, the equilibrium level of hatred is determined solely by the belief of the most extremist agent in the group regardless of the inherent structure of the network. On the contrary, when information is dense, the space is completely polarised in equilibrium with the presence of multiple "local truths" which oscillate in periodic cycles. We find that when preferences are uniformly distributed, the equilibrium level of hatred depends solely on the value of the practical punishment associated with holding a hate belief. Our finding suggests that an optimal policy to reduce hatred should focus on increasing the cost associated with holding a racist belief.