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News media as suppliers of narratives (and information)

Author

Listed:
  • Eliaz, Kfir

    (Department of Economics, Tel-Aviv University, and King's College London Business School)

  • Spiegler, Ran

    (School of Economics, Tel Aviv University, and Department of Economics, University College London)

Abstract

We present a model in which news media shape beliefs by providing information (signals about an exogenous state) and narratives (models of what determines outcomes). To amplify consumers' engagement, the media maximize their anticipatory utility. We characterize the optimal monopolistic media strategy under various classes of separable consumer preferences, and demonstrate the synergy between false narratives and biased information. Consumer heterogeneity gives rise to a novel menu-design problem due to an "equilibrium data externality" among consumers. The optimal menu features multiple narratives and creates polarized beliefs and choices. These effects also arise in a competitive media market model.

Suggested Citation

  • Eliaz, Kfir & Spiegler, Ran, 0. "News media as suppliers of narratives (and information)," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6424
    as

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    References listed on IDEAS

    as
    1. Ignacio Esponda & Demian Pouzo, 2016. "Berk–Nash Equilibrium: A Framework for Modeling Agents With Misspecified Models," Econometrica, Econometric Society, vol. 84, pages 1093-1130, May.
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    Keywords

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    JEL classification:

    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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