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News media and delegated information choice
Cornell Univ, Dept Econ, Ithaca, NY 14853 USA.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2019 (English)In: Journal of Economic Theory, ISSN 0022-0531, E-ISSN 1095-7235, Vol. 181, p. 160-196Article in journal (Refereed) Published
Abstract [en]

No agent has the resources to monitor all events that are potentially relevant for his decisions. Therefore, many delegate their information choice to specialized news providers that monitor the world on their behalf and report only a curated selection of events. We document empirically that, while different outlets typically emphasize different topics, major events shift the general news focus and make coverage more homogeneous. We propose a theoretical framework that formalizes this type of state-dependent editorial behavior by introducing news selection functions. We prove that (i) agents can always reduce the entropy of their posterior beliefs by delegating their information choice, (ii) state-dependent reporting conveys information not only via the contents of a story, but also via the decision of what to report, and (iii) an event that is reported by all news providers is common knowledge among agents only if it is also considered maximally newsworthy by all providers. As an application, we embed delegated news selection into a simple beauty-contest model to demonstrate how it affects actions in a setting with strategic interactions.

Place, publisher, year, edition, pages
ACADEMIC PRESS INC ELSEVIER SCIENCE , 2019. Vol. 181, p. 160-196
Keywords [en]
News media, Delegated information choice, Latent Dirichlet allocation, Common knowledge, Strategic games, Beauty contest
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-385563DOI: 10.1016/j.jet.2019.02.001ISI: 000467517200006OAI: oai:DiVA.org:uu-385563DiVA, id: diva2:1326057
Available from: 2019-06-17 Created: 2019-06-17 Last updated: 2019-06-17Bibliographically approved

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Citation style
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