An Economic Response to Unsolicited Communication
Thede C. Loder
University of Michigan - Department of Electrical Engineering and Computer Science
Marshall W. Van Alstyne
Boston University - Department of Management Information Systems; Massachusetts Institute of Technology (MIT) - Sloan School
University of Michigan at Ann Arbor - School of Information
August 15, 2005
We investigate welfare effects of mechanisms designed to improve total communications value. Identifying first contact information asymmetry and negative externalities as the critical problems, we analyze best-in-class solutions from law, technology, and economics. Comparison leads to several useful conclusions. First, mechanisms designed to promote valuable communication can outperform those designed to block wasteful communication. The best mechanism can, on occasion, outperform even a “perfect filter.” Second, it is advantageous to shift focus from message content to senders’ private knowledge. Recipients can then use information revelation mechanisms to force people who knowingly misuse communication to drop out or incur higher costs. Third, private knowledge of message value and the choice to communicate might favor senders over receivers. These advantages disappear, however, under a take-it-or-leave-it offer by recipients to refuse non-conforming communications. Fourth, giving recipients rights in their own attention can improve willingness to signal their preferences, which facilitates efficient sender targeting.
Number of Pages in PDF File: 43
Date posted: July 30, 2012
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