False Consensus, Information Theory, and Prediction Markets

Understand

We study a setting where Bayesian agents with a common prior have private information related to an event's outcome and sequentially make public announcements relating to their information.

• Our main result shows that when agents' private information is independent conditioning on the event's outcome whenever agents have similar beliefs about the outcome, their information is aggregated.
• That is, there is no false consensus.
• Our main result has a short proof based on a natural information theoretic framework.