Abstract
I study a bounded rationality model of opinion formation in which there are two different types of agents: naive agents and sophisticated agents. All agents update their opinions by taking weighted averages of neighbors’ opinions. Naive agents truthfully report their opinions, but sophisticated agents can strategically report opinions to manipulate naive agents. I show that the limiting opinions are completely determined by sophisticated agents’ biases and the structure of the network and that, generically, there is no consensus. I analyze how disagreement is affected by the intensity of lying cost, diverging interests, and the structure of the social network. I also show that naive agents do not have any social influence and sophisticated agents’ social influence can be decomposed into two separate factors: direct influence and indirect influence.
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