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Attention Manipulation and Information Overload

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  • Petra Persson

Abstract

Limits on consumer attention give firms incentives to manipulate prospective buyers’ allocation of attention. This paper models such attention manipulation and shows that it limits the ability of disclosure regulation to improve consumer welfare. Competitive information supply, from firms competing for attention, can reduce consumers’ knowledge by causing information overload. A single firm subjected to a disclosure mandate may deliberately induce such information overload to obfuscate financially relevant information, or engage in product complexification to bound consumers’ financial literacy. Thus, disclosure rules that would improve welfare for agents without attention limitations can prove ineffective for consumers with limited attention. Obfuscation suggests a role for rules that mandate not only the content but also the format of disclosure; however, even rules that mandate “easy-to-understand” formats can be ineffective against complexification, which may call for regulation of product design.

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  • Petra Persson, 2017. "Attention Manipulation and Information Overload," NBER Working Papers 23823, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23823
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    Cited by:

    1. Persson, Petra, 2018. "Attention manipulation and information overload," Behavioural Public Policy, Cambridge University Press, vol. 2(1), pages 78-106, May.
    2. Mikhalishchev, Sergei, 2023. "Optimal menu when agents make mistakes," Research in Economics, Elsevier, vol. 77(1), pages 25-33.
    3. Michael Grubb, 2015. "Behavioral Consumers in Industrial Organization: An Overview," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 247-258, November.
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    5. Timothy J. Richards & Gordon J. Klein & Celine Bonnet & Zohra Bouamra-Mechemache, 2020. "Strategic Obfuscation and Retail Pricing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(4), pages 859-889, December.
    6. Matteo Migheli & Giovanni Battista Ramello, 2018. "The market of academic attention," Scientometrics, Springer;Akadémiai Kiadó, vol. 114(1), pages 113-133, January.
    7. Moshe Maor, 2020. "Policy over- and under-design: an information quality perspective," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(3), pages 395-411, September.
    8. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2016. "Competition for Attention," Review of Economic Studies, Oxford University Press, vol. 83(2), pages 481-513.
    9. Christian Bach & Robert Edwards & Christian Jaag, 2023. "Postal Platform Pricing with Limited Consumer Attention," Working Papers 202318, University of Liverpool, Department of Economics.
    10. Giuseppe Pernagallo & Benedetto Torrisi, 2020. "A theory of information overload applied to perfectly efficient financial markets," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 14(2), pages 223-236, October.
    11. Cali Curley & Galib Rustamov & Nicky Harrison & Madeline Venable, 2020. "Susceptibility to Inattention: Unpacking Who is Susceptible to Inattention in Energy‐Based Electronic Billing," Review of Policy Research, Policy Studies Organization, vol. 37(6), pages 744-764, November.
    12. Arbatskaya, Maria & Aslam, Maria Vyshnya, 2018. "Liability or labeling? Regulating product risks with costly consumer attention," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 238-252.
    13. Johannes Abeler & Simon Jäger, 2013. "Complex Tax Incentives - An Experimental Investigation," CESifo Working Paper Series 4231, CESifo.
    14. Paul D. Adams & Stefan Hunt & Christopher Palmer & Redis Zaliauskas, 2019. "Testing the Effectiveness of Consumer Financial Disclosure: Experimental Evidence from Savings Accounts," NBER Working Papers 25718, National Bureau of Economic Research, Inc.
    15. Bertschek Irene & Müller David F., 2023. "Political Ignorance and the Internet," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(1), pages 3-28, February.
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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