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Information congestion

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  • Simon P. Anderson
  • André De Palma

Abstract

Unsolicited advertising messages vie for scarce attention. “Junk” mail, “spam” e‐mail, and telemarketing calls need both parties to exert effort to generate transactions. Message receivers supply attention according to average message benefit, while the marginal sender determines congestion. Costlier transmission may improve average message benefit so more messages are examined. Too many (too few) messages may be sent, or the wrong ones. A Do‐Not‐Call policy beats a ban, but too many individuals opt out. A monopoly gatekeeper performs better than personal access pricing if nuisance costs to receivers are moderate. The welfare results still hold when messages are presorted (triage).

Suggested Citation

  • Simon P. Anderson & André De Palma, 2009. "Information congestion," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 688-709, December.
    • Handle: RePEc:bla:randje:v:40:y:2009:i:4:p:688-709
    DOI: 10.1111/j.1756-2171.2009.00085.x
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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