If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages -- those with positive social surplus –- get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive value messages, and allow harmful messages through. In contrast, we propose an ``Attention Bond,'' allowing recipients to define a price that senders must risk to deliver the initial message.

The underlying problem is first-contact information asymmetry with negative externalities. Uninformed senders waste recipient attention through message pollution. Requiring attention bonds creates an attention market, effectively applying the Coase Theorem to price this scarce resource. In this market, screening mechanisms shift the burden of message classification from recipients to senders, who know message content. Price signals can also facilitate decentralized two-sided matching. In certain limited cases, this leads to greater welfare than use of even ``perfect'' filters.

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Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): advances.6 (2006)
Issue (Month): 1 ()
Pages:
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Handle: RePEc:bpj:bejeap:v:advances.6:y:2006:i:1:n:2

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Related research

Keywords: call externalities; Coase Theorem; spam; filter; information asymmetry; UCE; email communication; advertising; screening; signaling;

Find related papers by JEL classification:
D18 - Microeconomics - - Household Behavior - - - Consumer Protection
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
M3 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

Cited by:
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1. Benjamin Chiao & Jeffrey MacKie-Mason, 2006. "Using Uncensored Communication Channels to Divert Spam Traffic," Working Papers 06-20, NET Institute, revised Oct 2006. [Downloadable!]

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