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Information Overload in a Network of Targeted Communication

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  • Van Zandt, Timothy

Abstract

As the costs of generating and transmitting information fall, the main bottlenecks in communication networks are becoming the human receivers, who are overloaded with information. For networks of targeted communication, this paper discusses the meaning of information overload, provides a theoretical treatment of its causes, and examines mechanisms for allocating the attention of receivers. Mechanisms for allocating attention include surcharges on communication and auctions. These mechanisms increase the cost of sending messages and shift the task of screening messages from the receivers to the senders. This shift may benefit both the receivers and the senders because the senders know the contents of the messages whereas the receivers do not. We show that, if the communication cost is low, then an increase in the communication cost benefits most (but not all) receivers. The increase benefits all the senders if either the extra cost is a tax that is redistributed to them as lump-sum transfers or if the senders' information about the receivers is sufficiently accurate.

Suggested Citation

  • Van Zandt, Timothy, 2001. "Information Overload in a Network of Targeted Communication," CEPR Discussion Papers 2836, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2836
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    References listed on IDEAS

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    1. Stegeman, Mark, 1991. "Advertising in Competitive Markets," American Economic Review, American Economic Association, vol. 81(1), pages 210-223, March.
    2. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 63-81.
    3. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
    4. Meyer, Robert J & Johnson, Eric J, 1989. " Information Overload and the Nonrobustness of Linear Models: A Comment," Journal of Consumer Research, Oxford University Press, vol. 15(4), pages 498-503, March.
    5. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
    6. Robert, Jacques & Stahl, Dale O, II, 1993. "Informative Price Advertising in a Sequential Search Model," Econometrica, Econometric Society, vol. 61(3), pages 657-686, May.
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    More about this item

    Keywords

    Information Overload; Limited Attention;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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