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The Value of and Demand for Diverse News Sources

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  • Evan M. Calford
  • Anujit Charkraborty

Abstract

We study the value of and the demand for instrumentally-valuable information in a simple decision environment where signals are transparently biased. We observe remarkable sophistication in information aggregation and acquisition. A majority of our subjects (63%) made unbiased reports even when faced with biased signals and the few subjects who made biased reports were split between under- and over-correcting for the signal bias. When allowed to buy pairs of opposite or similarly biased information sources, subjects actively shopped for diverse information at personal costs, and their demand for diverse information reacted rationally to its value and cost. Subjects who were worse at aggregating information, were more likely to purchase diverse signals, perhaps in an attempt to make their inference problem easier. Our results advocate for greater transparency in media bias, so that individuals can choose the right portfolio of information to make better choices.

Suggested Citation

  • Evan M. Calford & Anujit Charkraborty, 2022. "The Value of and Demand for Diverse News Sources," ANU Working Papers in Economics and Econometrics 2022-688, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2022-688
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    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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