Working Paper: CEPR ID: DP2836
Authors: Timothy Van Zandt
Abstract: As the costs of generating and transmitting information fall, the main bottlenecks in communication networks are becoming the human receivers, who are overloaded with information. For networks of targeted communication, this paper discusses the meaning of information overload, provides a theoretical treatment of its causes, and examines mechanisms for allocating the attention of receivers. Mechanisms for allocating attention include surcharges on communication and auctions. These mechanisms increase the cost of sending messages and shift the task of screening messages from the receivers to the senders. This shift may benefit both the receivers and the senders because the senders know the contents of the messages whereas the receivers do not. We show that, if the communication cost is low, then an increase in the communication cost benefits most (but not all) receivers. The increase benefits all the senders if either the extra cost is a tax that is redistributed to them as lump-sum transfers or if the senders' information about the receivers is sufficiently accurate.
Keywords: information overload; limited attention
JEL Codes: D62; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low communication cost (L96) | increase in communication cost benefits most receivers (D61) |
| increase in communication cost (L96) | senders become more selective in targeting messages (L96) |
| senders become more selective in targeting messages (L96) | increase in average value of information received by receivers (D89) |
| increase in communication cost (L96) | aggregate welfare of receivers rises (F62) |
| increase in communication cost (L96) | some receivers may be worse off (L96) |
| higher costs shift task of screening messages from receivers to senders (L96) | enhance quality of communication received by receivers (L15) |