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Competition for attention in the information (overload) age

Author

Listed:
  • S. Anderson

    (Department of Economics, University of Virginia - Uniiversity of Virginia)

  • André de Palma

    (ENS Cachan - École normale supérieure - Cachan, X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Limited consumer attention limits product market competition: prices are stochastically lower the more attention is paid. Ads compete to be the lowest price in a sector but compete for attention with ads from other sectors: equilibrium ad shares follow a CES form. When a sector gets more proÞtable, its advertising expands: others lose ad market share. The "information hump" shows highest ad levels for intermediate attention levels. The Information Age takes off when the number of viable sectors grows, but total ad volume reaches an upper limit. Overall, advertising is excessive, though the allocation across sectors is optimal.

Suggested Citation

  • S. Anderson & André de Palma, 2012. "Competition for attention in the information (overload) age," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00517721, HAL.
    • Handle: RePEc:hal:cesptp:hal-00517721
    DOI: 10.1111/j.1756-2171.2011.00155.x
    Note: View the original document on HAL open archive server: https://hal.science/hal-00517721
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    information congestion; economics of attention; information age; price dispersion; advertising distribution; consumer attention; information Þltering; size distribution of Þrms; CES; information congestion.;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I0 - Health, Education, and Welfare - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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