Optimal Dynamic Allocation of Attention

Yeon-Koo Che and Konrad Mierendorff

American Economic Review, 2019, vol. 109, issue 8, 2993-3029

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.

JEL-codes: D72 D83 D91 L82 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20171000
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Citations: View citations in EconPapers (44)

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Working Paper: Optimal Dynamic Allocation of Attention (2018)
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