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What is the Value of Attention? Supply and Demand Estimation of Attention in a Mobile App Setting

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  • Orrenius, Johan

    (Research Institute of Industrial Economics (IFN))

Abstract

I study the digital market for attention in a freemium mobile game where users choose between paying with money or by watching 30-second video ads. Using unique event-level data, I estimate consumers’ supply elasticity of attention. In the aggregate, a one percent higher price increases the share of users watching videos as a payment by 2.2 percent. A substantial part is due to individual heterogeneity in tastes. When accounting for individual heterogeneity, the elasticity reduces to 0.5. The individual elasticities vary throughout the day, peaking in the evening. Complementing the unique data on each play made by users, I use data on the revenue to the gaming company from showing ads. The data is on an individual and daily level, allowing me to match the individual supply elasticity with the revenue from showing ads to the same individual. I find advertisers pay more to show ads to individuals who are less likely to use ads as their payment method. The effect is stronger among Android users than iOS users.

Suggested Citation

  • Orrenius, Johan, 2026. "What is the Value of Attention? Supply and Demand Estimation of Attention in a Mobile App Setting," Working Paper Series 1550, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1550
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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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