Welfare in Experimental News Markets

Andrea Albertazzi, Matteo Ploner and Federico Vaccari
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Andrea Albertazzi: Department of Economics and Statistics, University of Siena

No 2022.41, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We perform a controlled experiment to study the welfare effects of competition in a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost. We compare a treatment where only one sender communicates to a treatment where both senders privately communicate with a decision-maker. Data show that competition between senders does not increase the amount of information decision-makers obtain. We find evidence of under-communication, as the information transmitted is lower than what theory predicts in the most informative equilibrium. Senders are worse off under competition because their relative gains from persuasion are more than offset by their expenditures in misreporting costs. As a result, competition between senders reduces the total welfare.

Keywords: Experiment; Welfare; Multiple senders; Competition; Sender-receiver games (search for similar items in EconPapers)
JEL-codes: C72 C92 D60 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-exp and nep-gth
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Related works:
Working Paper: Welfare in Experimental News Markets (2022)
Working Paper: Welfare in Experimental News Markets (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2022.41

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