Economics of News and Information
Saturday, Jan. 6, 2018 8:00 AM - 10:00 AM
- Chair: Matthew Gentzkow , Stanford University
Equilibrium Effects of Pay Transparency
AbstractThe public conversation about increasing pay transparency largely ignores its equilibrium effects, such as changes in hiring, wage-setting, and bargaining processes. By accounting for these effects, we find that increasing pay transparency shifts surplus away from workers and toward their employer. Greater transparency can also increase employment and decrease inequality in earnings. We isolate these effects in a theoretical equilibrium model of dynamic bargaining and in a large-scale longitudinal data analysis. We further corroborate our conclusion using an online field experiment. Intermediate levels of pay transparency, achieved through a permissive environment to discuss relative pay, can exacerbate the gender pay gap by virtue of network effects. External intervention may be necessary to maintain a desirable level of transparency. We test an alternative model in which wage compression is driven by social aversion to observed wage inequality.
Voluntary Disclosure in Bilateral Transactions
AbstractWe analyze optimal voluntary disclosure by a privately informed agent who faces a counterparty endowed with market power in a bilateral transaction. While disclosures reduce the agent's informational advantage, they may increase his information rents by mitigating the counterparty's incentives to resort to inefficient screening. We show that when disclosures are restricted to be ex post verifiable, the privately informed agent always finds it optimal to design a partial disclosure plan that implements socially efficient trade in equilibrium. Our results have important implications for understanding the conditions under which asymmetric information impedes trade and for regulating information disclosure.
AbstractFake news has been influential and topical recently. The senders intentionally produce fake news to benefit financially or politically from leveraging them to mislead the receivers . We propose and fully solve a game theoretic model which captures the tension between the sender and the receiver of fake news. We have a potentially infinite horizon continuous time model with two agents with asymmetric information where the receiver does not know whether the sender is sending fake news. The receiver receives a stream of news from the sender, which contains both true news and fake news if it is a fake news sender. The fake news differentiates from the true news in that their content follow different distributions. Based on the news the receiver observes, she updates her belief on whether the sender is sending fake news, then she dynamically decides whether to continue getting news from this source. The sender dynamically decides the volume of the fake news facing a trade-off between the immediate gain from making the receiver reads more fake news and the loss in the future due to the loss of trust of the receiver. We prove the existence and uniqueness of Markov equilibrium and show insights from the equilibrium strategies and payoffs. Practically, fake news senders are specialized while the receivers are relative naive, therefore we model and analyze an off-equilibrium case where the receiver is not accurately anticipating the fake news sender's behavior.
Media Bias in Public Service Broadcasting: Evidence from the BBC
AbstractPublic Service Broadcasting is a popular form of news consumption in many European countries. In this paper, we document and analyze bias in the TV news content of the oldest and the largest public broadcaster in the world, the British Broadcasting Corporation (BBC). Following Laver, Benoit and Garry (2003), we compare the similarity of language in news transcripts to speeches in the UK Parliament from 2013-2016. In preliminary results, we find consistent pro-Labour bias relative to all other major UK political parties, including Conservative, Liberal Democrat, Scottish National Party and Plaid Cymru, for all but the period immediately following the 2015 election (a surprise win by the Conservatives), where we find a pro-Conservative bias. This shift in bias towards language more similar to Conservative speeches is also evident in online news reporting on bbc.com, and is robust to alternative specifications and placebo tests. These preliminary findings suggest that shifts in bias stemming from political power and control may be evidence of a ``weak'' form of media capture in the UK.
- D8 - Information, Knowledge, and Uncertainty