2018

Attention Manipulation and Information Overload

Reprint No. 2018:24

Author(s): Petra PerssonYear: 2018 Title: Behavioural Public Policy Volume (No.): 2 (1) Pages: 78–106
Online article (restrictions may apply)
Preliminary version


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.


Reference:
Persson, Petra (2018), "Attention Manipulation and Information Overload". Behavioural Public Policy 2(1), 78–106.

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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