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Attention Manipulation and Information Overload

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  • Persson, Petra

Abstract

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.

Suggested Citation

  • Persson, Petra, 2017. "Attention Manipulation and Information Overload," CEPR Discussion Papers 12297, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12297
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    Cited by:

    1. Persson, Petra, 2018. "Attention manipulation and information overload," Behavioural Public Policy, Cambridge University Press, vol. 2(1), pages 78-106, May.
    2. Mikhalishchev, Sergei, 2023. "Optimal menu when agents make mistakes," Research in Economics, Elsevier, vol. 77(1), pages 25-33.
    3. Michael Grubb, 2015. "Behavioral Consumers in Industrial Organization: An Overview," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 247-258, November.
    4. Michael D. Grubb, 2015. "Behavioral Consumers in Industrial Organization," Boston College Working Papers in Economics 879, Boston College Department of Economics.
    5. Timothy J. Richards & Gordon J. Klein & Celine Bonnet & Zohra Bouamra-Mechemache, 2020. "Strategic Obfuscation and Retail Pricing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(4), pages 859-889, December.
    6. Matteo Migheli & Giovanni Battista Ramello, 2018. "The market of academic attention," Scientometrics, Springer;Akadémiai Kiadó, vol. 114(1), pages 113-133, January.
    7. Moshe Maor, 2020. "Policy over- and under-design: an information quality perspective," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(3), pages 395-411, September.
    8. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2016. "Competition for Attention," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 481-513.
    9. Christian Bach & Robert Edwards & Christian Jaag, 2023. "Postal Platform Pricing with Limited Consumer Attention," Working Papers 202318, University of Liverpool, Department of Economics.
    10. Giuseppe Pernagallo & Benedetto Torrisi, 2020. "A theory of information overload applied to perfectly efficient financial markets," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 14(2), pages 223-236, October.
    11. Arve, Malin & Honryo, Takakazu, 2015. "Delegation and Communication," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 524, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    12. Duffy, Sean & Smith, John, 2014. "Cognitive load in the multi-player prisoner's dilemma game: Are there brains in games?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 51(C), pages 47-56.
    13. Michael J. Lamla & Dmitri V. Vinogradov, 2021. "Is the Word of a Gentleman as Good as His Tweet? Policy communications of the Bank of England," Working Paper Series in Economics 403, University of Lüneburg, Institute of Economics.
    14. Cali Curley & Galib Rustamov & Nicky Harrison & Madeline Venable, 2020. "Susceptibility to Inattention: Unpacking Who is Susceptible to Inattention in Energy‐Based Electronic Billing," Review of Policy Research, Policy Studies Organization, vol. 37(6), pages 744-764, November.
    15. Zakir Shah & Lu Wei & Usman Ghani, 2021. "The Use of Social Networking Sites and Pro-Environmental Behaviors: A Mediation and Moderation Model," IJERPH, MDPI, vol. 18(4), pages 1-21, February.
    16. Adams, Paul & Hunt, Stefan & Palmer, Christopher & Zaliauskas, Redis, 2021. "Testing the effectiveness of consumer financial disclosure: Experimental evidence from savings accounts," Journal of Financial Economics, Elsevier, vol. 141(1), pages 122-147.
    17. Abeler, Johannes & Jäger, Simon, 2013. "Complex Tax Incentives: An Experimental Investigation," IZA Discussion Papers 7373, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    Information overload; Complexity; Persuasion; Disclosure regulation; Consumer protection; Salience;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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