2006/04/01 by Matthew Gentzkow, Jesse M. Shapiro · 5 citations
Social Sciences · Decision Sciences · Business, Management and Accounting · #Media Influence and Politics #Game Theory and Applications #Political Influence and Corporate Strategies
paper · doi:10.1086/499414
openalex publication_date 2006/04/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
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.