Department of Economics and Business - Universitat Pompeu Fabra

Title:: Time scarcity and the market for news
Authors:: Larbi Alaoui and Fabrizio Germano
Date:: December 2012 (Revised: April 2019)
Abstract:: We develop a theory of news coverage in environments of information abundance. Time-constrained consumers browse through news items across competing outlets. They choose which outlets to access and which stories to read or skip, thus indirectly deciding how much time to spend on a given outlet. Firms decide on rankings of news items that maximize their profits. We show that even when readers (or television viewers) and firms are rational and unbiased, they spend more time on the news than they would like and not necessarily on the topics they prefer. In particular, relevant news items may be crowded out. We then study how reader-efficient standards can be restored and derive implications on diverse aspects of current media, including advertising and reader preference for like-minded news.
Keywords:: News markets; news coverage; time constrained consumers; media competition; digital media.
JEL codes:: H44; L13; L82; L86.
Area of Research:: Behavioral and Experimental Economics / Microeconomics

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