Media market structure and confirmatory news

This paper studies the effect of media market competition on a tendency, discussed in the literature, to report news confirming common priors in order to appear competent, termed confirmatory bias. It allows for both single- and multi-homing. Competition helps sustain informative rather than confirmatory reporting when priors are relatively precise, but it has the opposite effect when the priors are diffuse. The reason is that when competing outlets are perceived as similarly competent, consumers optimally multi-home. This creates strategic complementarity in informative reporting, reducing the requirement to sustain it when priors are relatively precise. However, when perceived competencies diverge, consumers single-home with the outlet they view as most competent, creating incentives for confirmatory reporting and, consequently, a requirement for informative reporting when priors are diffuse.