Media Bias and Reputation

Matthew Gentzkow and Jesse Shapiro

No 11664, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A Bayesian consumer who is uncertain about the quality of an information source will infer that the source is of higher quality when its reports conform to the consumer's prior expectations. We use this fact to build a model of media bias in which firms slant their reports toward the prior beliefs of their customers in order to build a reputation for quality. Bias emerges in our model even though it can make all market participants worse off. The model predicts that bias will be less severe when consumers receive independent evidence on the true state of the world, and that competition between independently owned news outlets can reduce bias. We present a variety of empirical evidence consistent with these predictions.

JEL-codes: D83 L10 L82 (search for similar items in EconPapers)
Date: 2005-10
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Published as Gentzkow, Matthew and Jesse M. Shapiro. "Media Bias And Reputation," Journal of Political Economy, 2006, v114(2,Apr), 280-316.

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