Attention Manipulation and Information Overload
No 23823, NBER Working Papers from National Bureau of Economic Research, Inc
Limits on consumer attention give firms incentives to manipulate prospective buyers’ allocation of attention. This paper models such attention manipulation and shows that it limits the ability of disclosure regulation to improve consumer welfare. Competitive information supply, from firms competing for attention, can reduce consumers’ knowledge by causing information overload. A single firm subjected to a disclosure mandate may deliberately induce such information overload to obfuscate financially relevant information, or engage in product complexification to bound consumers’ financial literacy. Thus, disclosure rules that would improve welfare for agents without attention limitations can prove ineffective for consumers with limited attention. Obfuscation suggests a role for rules that mandate not only the content but also the format of disclosure; however, even rules that mandate “easy-to-understand” formats can be ineffective against complexification, which may call for regulation of product design.
JEL-codes: D11 D14 D18 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fle and nep-mic
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Published as PETRA PERSSON, 2018. "Attention manipulation and information overload," Behavioural Public Policy, vol 2(01), pages 78-106.
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Journal Article: Attention manipulation and information overload (2018)
Working Paper: Attention Manipulation and Information Overload (2017)
Working Paper: Attention Manipulation and Information Overload (2013)
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