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News Consumption and Media Bias

  • Yi Xiang

    ()

    (The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong)

  • Miklos Sarvary

    ()

    (INSEAD, 77305 Fontainebleau, France)

Registered author(s):

Bias in the market for news is well-documented. Recent research in economics explains the phenomenon by assuming that consumers want to read (watch) news that is consistent with their tastes or prior beliefs rather than the truth. The present paper builds on this idea but recognizes that (i) besides “biased” consumers, there are also “conscientious” consumers whose sole interest is in discovering the truth, and (ii) consistent with reality, media bias is constrained by the truth. These two factors were expected to limit media bias in a competitive setting. Our results reveal the opposite. We find that media bias may increase when there are more conscientious consumers. However, this increased media bias does not necessarily hurt conscientious consumers who may be able to recover more information from multiple media outlets the more the outlets are biased. We discuss the practical implications of these findings for media positioning, media pricing, media planning, and the targeting of advertising.

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File URL: http://dx.doi.org/10.1287/mksc.1070.0279
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Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 26 (2007)
Issue (Month): 5 (09-10)
Pages: 611-628

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Handle: RePEc:inm:ormksc:v:26:y:2007:i:5:p:611-628
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  1. Coase, R H, 1974. "The Market for Goods and the Market for Ideas," American Economic Review, American Economic Association, vol. 64(2), pages 384-91, May.
  2. Djankov, Simeon & Caralee, McLiesh & Nenova, Tatiana & Shleifer, Andrei, 2003. "Who Owns the Media?," Scholarly Articles 3606236, Harvard University Department of Economics.
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  7. Edward L. Glaeser, 2005. "The Political Economy of Hatred," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 45-86.
  8. Sendhil Mullainathan & Andrei Shleifer, 2002. "Media Bias," NBER Working Papers 9295, National Bureau of Economic Research, Inc.
  9. Anthony Dukes & Esther Gal–Or, 2003. "Negotiations and Exclusivity Contracts for Advertising," Marketing Science, INFORMS, vol. 22(2), pages 222-245, November.
  10. Randall G. Chapman & Kristian S. Palda, 1984. "Assessing the Influence of Campaign Expenditures on Voting Behavior with a Comprehensive Electoral Market Model," Marketing Science, INFORMS, vol. 3(3), pages 207-226.
  11. Stromberg, David, 2001. "Mass media and public policy," European Economic Review, Elsevier, vol. 45(4-6), pages 652-663, May.
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