Rationally Inattentive Echo Chambers

Rationally inattentive players allocate limited attention capacities to biased primary sources and to other players as secondary sources to acquire information about an uncertain state. The resulting Poisson attention network stochastically transmits information from primary sources to a recipient either directly or indirectly through other players. We give conditions for the rise of echo-chamber equilibria in which players restrict attention to their own-biased primary source and same-type peers. We characterize the peer attention networks within echo chambers and analyze their comparative statics. Our results explain why modern information environments foster echo-chamber formation, how small differences in attention capacities can magnify into large disparities in allocations, and why regulatory interventions such as altering user visibility on social media or mandating exposure to opposing views may entail unintended consequences.