Segregation and clustering of preferences erode socially beneficial coordination.

ABSTRACT

Polarization on various issues has increased in many Western democracies over the last decades, leading to divergent beliefs, preferences, and behaviors within societies. We develop a model to investigate the effects of polarization on the likelihood that a society will coordinate on a welfare-improving action in a context in which collective benefits are acquired only if enough individuals take that action. We examine the impacts of different manifestations of polarization heterogeneity of preferences, segregation of the social network, and the interaction between the two. In this context, heterogeneity captures differential perceived benefits from coordinating, which can lead to different intentions and sensitivity regarding the intentions of others. Segregation of the social network can create a bottleneck in information flows about others' preferences, as individuals may base their decisions only on their close neighbors. Additionally, heterogeneous preferences can be evenly distributed in the population or clustered in the local network, respectively reflecting or systematically departing from the views of the broader society. The model predicts that heterogeneity of preferences alone is innocuous and it can even be beneficial, while segregation can hamper coordination, mainly when local networks distort the distribution of valuations. We base these results on a multimethod approach including an online group experiment with 750 individuals. We randomize the range of valuations associated with different choice options and the information respondents have about others. The experimental results reinforce the idea that, even in a situation in which all could stand to gain from coordination, polarization can impede social progress.