Pricing Electronic Mail to Solve the Problem of Spam

Abstract:     
Junk e-mail or spam is rapidly choking off e-mail as a reliable and efficient means of communication over the Internet. Although the demand for human attention increases rapidly with the volume of information and communication, the supply of attention hardly changes. Markets are a social institution for efficiently allocating supply and demand of scarce resources. Charging a price for sending messages may help discipline senders from demanding more attention than they are willing to pay for. Price may also credibly inform recipients about the value of a message to the sender before they read it. This article examines economic approaches to the problem of spam and the results of two laboratory experiments to explore the consequences of a pricing system for electronic mail. Charging postage for e-mail causes senders to be more selective and to send fewer messages. However, recipients did not interpret the postage paid by senders as a signal of the importance of the messages. These results suggest that markets for attention have the potential for addressing the problem of spam but their design needs further development and testing.

Keywords: spam, Junk, pricing e-mail, market for attention

JEL Classifications: D40, D61, L50, L86, L96, O33

Working Paper Series