A characteristic of the news market is that consumers often cross-check information, i.e. observe several news outlets. At the same time, data on political media suggest that more partisan consumers are more likely to cross-check. We explore these phenomena by building a model of horizontal competition in
newspaper endorsements. Without cross-checking, outlets are unbiased and minimally di erentiated. When cross-checking is allowed, we show that cross-checkers are indeed more partisan than those who only acquire one report. Furthermore, cross-checking induces outlets to di erentiate, and the degree of di erentiation is increasing in the dispersion of consumer beliefs. Di erentiation is detrimental to consumer welfare, and a single monopoly outlet may provide higher consumer welfare than a competitive duopoly.
By Jesper Rüdiger
https://dl.dropboxusercontent.com/u/5148008/CrossChecking.pdf
Expert opinions are often biased. To test how such bias a ffects the propensity to use opinions, we set up an experiment where subjects estimate the probability of an event that depends on (i) the subject's type, which is observable, and (ii) the unobserved state of the world. Before making their estimate, one group of subjects, the clients, observe the opinion (estimate) of another subject, the expert. The expert has private information about the state, but he may be of a diff erent type than the clients, and therefore biased. Bias is observable and easily corrected. In spite of this, we nd that clients' propensity to use expert opinions is decreasing in the size of the expert's bias. This aversion to use the opinions of biased experts is not explained by computational concerns, ex-post expert informativeness or reluctance to move away from the prior\
By Jesper Rüdiger
https://dl.dropboxusercontent.com/u/5148008/ExpBIT.pdf
