An Economic Response to Unsolicited Communication

Advances in Economic Analysis & Policy, Vol. 6, No. 1, 2006

Boston U. School of Management Research Paper

MIT Sloan Research Paper No. 4880-11

55 Pages Posted: 18 Feb 2011 Last revised: 26 Sep 2012

Thede C. Loder

University of Michigan - Department of Electrical Engineering and Computer Science

Marshall W. Van Alstyne

Boston University – Questrom School of Business; Massachusetts Institute of Technology (MIT) - Sloan School

Rick Wash

University of Michigan at Ann Arbor - School of Information

Multiple version iconThere are 2 versions of this paper

Date Written: February 15, 2011

Abstract

If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages - those with positive social surplus - get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive value messages, and allow harmful messages through. In contrast, we propose an "Attention Bond," allowing recipients to define a price that senders must risk to deliver the initial message.

The underlying problem is first-contact information asymmetry with negative externalities. Uninformed senders waste recipient attention through message pollution. Requiring attention bonds creates an attention market, effectively applying the Coase Theorem to price this scarce resource. In this market, screening mechanisms shift the burden of message classification from recipients to senders, who know message content. Price signals can also facilitate decentralized two-sided matching. In certain cases, this leads to greater welfare than use of even "perfect" filters.

Keywords: Network Externalities, Call Externalities, Coase Theorem, Spam, UCE, Screening, Signaling, Filtering, Attention Markets

JEL Classification: C72, C78, D23, D6, D82, H21, O30

Suggested Citation

Loder, Thede C. and Van Alstyne, Marshall W. and Wash, Rick, An Economic Response to Unsolicited Communication (February 15, 2011). Advances in Economic Analysis & Policy, Vol. 6, No. 1, 2006; Boston U. School of Management Research Paper; MIT Sloan Research Paper No. 4880-11. Available at SSRN: https://ssrn.com/abstract=1762212

Thede C. Loder

University of Michigan - Department of Electrical Engineering and Computer Science ( email )

1101 Beal Avenue
Ann Arbor, MI 48109
United States
415-420-8615 (Phone)

HOME PAGE: http://www.loder.com

Marshall W. Van Alstyne (Contact Author)

Boston University – Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
617-358-3571 (Phone)

HOME PAGE: http://questromapps.bu.edu/mgmt_new/Profiles/VanAlstyneMarshall.html

Massachusetts Institute of Technology (MIT) - Sloan School ( email )

Center for Digital Business
5 Cambridge Center - NE25, 7th Floor
Cambridge, MA 02142
United States
617-253-0768 (Phone)

HOME PAGE: http://web.mit.edu/marshall/www/home.html

Richard Wash

University of Michigan at Ann Arbor - School of Information ( email )

304 West Hall
550 East University
Ann Arbor, MI 48109-1092
United States

Paper statistics

Downloads
54
Rank
293,291
Abstract Views
651