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Information congestion

Author Info

  • 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). Copyright (c) 2009, RAND.

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Article provided by RAND Corporation in its journal The RAND Journal of Economics.

Volume (Year): 40 (2009)
Issue (Month): 4 ()
Pages: 688-709

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Handle: RePEc:bla:randje:v:40:y:2009:i:4:p:688-709
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Find related papers by 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

References listed on IDEAS
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  1. Simon P. Anderson & Stephen Coate, 2005. "Market Provision of Broadcasting: A Welfare Analysis," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 947-972.
  2. Baye, Michael & Morgan, John, 2004. "Brand and Price Advertising in Online Markets," Competition Policy Center, Working Paper Series qt9760k3hz, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  3. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
  4. repec:rje:randje:v:37:y:2006:3:p:668-691 is not listed on IDEAS
  5. Il-Horn Hann & Kai-Lung Hui & Sang-Yong Tom Lee & Ivan Png, 2005. "Consumer Privacy and Marketing Avoidance," Industrial Organization 0503009, EconWPA.
  6. Timothy Van Zandt, 2004. "Information Overload in a Network of Targeted Communication," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 542-560, Autumn.
  7. Katz, Michael & E, Benjamin. Hermalin, 2005. "Sender or Receiver: Who should pay to Exchange an Electronic Messages?," Working Paper Series 3812, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
  8. Simon P. Anderson & André De Palma, 2012. "Shouting to be Heard in Advertising," Working Papers hal-00742240, HAL.
  9. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
  10. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 63-81.
  11. Doh-Shin Jeon & Jean-Jacques Laffont & Jean Tirole, 2004. "On the Receiver-Pays Principle," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 85-110, Spring.
  12. Mark Armstrong, 2006. "Competition in two‐sided markets," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 668-691, 09.
  13. repec:reg:rpubli:272 is not listed on IDEAS
  14. Simon P. Anderson & Regis Renault, 1999. "Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 719-735, Winter.
  15. Robert, Jacques & Stahl, Dale O, II, 1993. "Informative Price Advertising in a Sequential Search Model," Econometrica, Econometric Society, vol. 61(3), pages 657-86, May.
  16. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, EconWPA, revised 29 Aug 2005.
  17. Stahl, Dale O, II, 1989. "Oligopolistic Pricing with Sequential Consumer Search," American Economic Review, American Economic Association, vol. 79(4), pages 700-712, September.
  18. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 217-235.
  19. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
  20. Bagwell, Kyle, 2007. "The Economic Analysis of Advertising," Handbook of Industrial Organization, Elsevier.
  21. Willmore, C., 1999. "A Penny for your Thoughts: E-Mail and the Under-Valuation of Expert Time," The Warwick Economics Research Paper Series (TWERPS) 551, University of Warwick, Department of Economics.
  22. Engers, Maxim & Gans, Joshua S, 1998. "Why Referees Are Not Paid (Enough)," American Economic Review, American Economic Association, vol. 88(5), pages 1341-49, December.
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Cited by:

  1. Simon P. Anderson & André de Palma, 2012. "Competition for attention in the Information (overload) Age," RAND Journal of Economics, RAND Corporation, vol. 43(1), pages 1-25, 03.
  2. Simon P. Anderson & Oystein Foros & Hans Jarle Kind & Martin Peitz, 2011. "Media Market Concentration, Advertising Levels, and Ad Prices," CESifo Working Paper Series 3677, CESifo Group Munich.
  3. Peitz, M. & Schütt, F., 2015. "Net Neutrality and Inflation of Traffic," Discussion Paper 2015-006, Tilburg University, Tilburg Law and Economic Center.
  4. Haan, Marco A. & Moraga-Gonzalez, Jose L., 2009. "Advertising for attention in a consumer search model," IESE Research Papers D/794, IESE Business School.
  5. Maria Arbatskaya & Hideo Konishi, 2013. "Consumer Referrals," Emory Economics 1310, Department of Economics, Emory University (Atlanta).
  6. Il-Horn Hann & Kai-Lung Hui & Sang-Yong T. Lee & Ivan P. L. Png, 2008. "Consumer Privacy and Marketing Avoidance: A Static Model," Management Science, INFORMS, vol. 54(6), pages 1094-1103, June.
  7. Arbatskaya Maria & Konishi Hideo, 2014. "Managing Consumer Referrals on a Chain Network," Review of Network Economics, De Gruyter, vol. 13(1), pages 69-94, March.
  8. Aloui, Chokri & Jebsi, Khaïreddine, 2016. "Platform optimal capacity sharing: Willing to pay more does not guarantee a larger capacity share," Economic Modelling, Elsevier, vol. 54(C), pages 276-288.
  9. Hartmut Egger & Josef Falkinger, 2013. "Limited Consumer Attention in International Trade," CESifo Working Paper Series 4166, CESifo Group Munich.
  10. Chiao, Benjamin & MacKie-Mason, Jeffrey, 2012. "Using uncensored communication channels to divert spam traffic," Information Economics and Policy, Elsevier, vol. 24(3), pages 173-186.
  11. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
  12. Khim Yong, Goh & Kai-Lung, Hui & I.P.L., Png, 2008. "Social Interaction, Observational Learning, and Privacy: the "Do Not Call" Registry," MPRA Paper 8225, University Library of Munich, Germany.
  13. André De Palma & Robin Lindsey & Nathalie Picard, 2008. "Risk aversion, the value of information and traffic equilibrium," Working Papers hal-00349492, HAL.

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