News Media as Suppliers of Narratives (and Information)

Kfir Eliaz and Ran Spiegler

No 19081, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We present a model of news media that shape consumer beliefs by providing information (signals about an exogenous state) and narratives (models of what determines outcomes). To amplify consumers' engagement, media maximize consumers' anticipatory utility. Focusing on a class of separable consumer preferences, we show that a monopolistic media platform facing homogenous consumers provides a false "empowering" narrative coupled with an optimistically biased signal. Consumer heterogeneity gives rise to a novel menu-design problem due to a "data externality" among consumers. The optimal menu features multiple narratives and creates polarized beliefs. These effects also arise in a competitive media market model.

Keywords: Media bias; Motivated beliefs; Narratives (search for similar items in EconPapers)
JEL-codes: D83 D91 (search for similar items in EconPapers)
Date: 2024-05
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