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Optimal Dynamic Allocation of Attention

  • Yeon-Koo Che
  • Konrad Mierendorff
American Economic Review
vol. 109, no. 8, August 2019
(pp. 2993-3029)
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Abstract

We consider a decision maker (DM) who, before taking an action, seeks information by allocating her limited attention dynamically over different news sources that are biased toward alternative actions. Endogenous choice of information generates rich dynamics: the chosen news source either reinforces or weakens the prior, shaping subsequent attention choices, belief updating, and the final action. The DM adopts a learning strategy biased toward the current belief when the belief is extreme and against that belief when it is moderate. Applied to consumption of news media, observed behavior exhibits an "echo-chamber" effect for partisan voters and a novel "anti-echo-chamber" effect for moderates.

Citation

Che, Yeon-Koo, and Konrad Mierendorff. 2019. "Optimal Dynamic Allocation of Attention." American Economic Review, 109 (8): 2993-3029. DOI: 10.1257/aer.20171000

Additional Materials

JEL Classification

  • D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
  • L82 Entertainment; Media