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Welfare in Experimental News Markets

Author

Listed:
  • Albertazzi, Andrea
  • Ploner, Matteo
  • Vaccari, Federico
Abstract
We perform a controlled experiment to study the welfare effects of competition in a strategic communication environment. Two equally informed senders with conflicting interests can misreport information at a cost. We compare a treatment where only one sender communicates to a treatment where both senders privately communicate with a decision-maker. Data show that competition between senders does not increase the amount of information decision-makers obtain. We find evidence of under-communication, as the information transmitted is lower than what theory predicts in the most informative equilibrium. Senders are worse off under competition because their relative gains from persuasion are more than offset by their expenditures in misreporting costs. As a result, competition between senders reduces the total welfare.

Suggested Citation

  • Albertazzi, Andrea & Ploner, Matteo & Vaccari, Federico, 2022. "Welfare in Experimental News Markets," FEEM Working Papers 329585, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemwp:329585
    DOI: 10.22004/ag.econ.329585
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    More about this item

    Keywords

    Environmental Economics and Policy; Institutional and Behavioral Economics; Labor and Human Capital;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D60 - Microeconomics - - Welfare Economics - - - General

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