Media Bias and Reputation

52 Pages Posted: 7 Dec 2005 Last revised: 16 Nov 2022

See all articles by Matthew Gentzkow

Matthew Gentzkow

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Jesse M. Shapiro

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: October 2005

Abstract

A Bayesian consumer who is uncertain about the quality of an information source will infer that the source is of higher quality when its reports conform to the consumer's prior expectations. We use this fact to build a model of media bias in which firms slant their reports toward the prior beliefs of their customers in order to build a reputation for quality. Bias emerges in our model even though it can make all market participants worse off. The model predicts that bias will be less severe when consumers receive independent evidence on the true state of the world, and that competition between independently owned news outlets can reduce bias. We present a variety of empirical evidence consistent with these predictions.

Suggested Citation

Gentzkow, Matthew Aaron and Shapiro, Jesse M., Media Bias and Reputation (October 2005). NBER Working Paper No. w11664, Available at SSRN: https://ssrn.com/abstract=819825

Matthew Aaron Gentzkow

University of Chicago - Booth School of Business ( email )

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United States

National Bureau of Economic Research (NBER)

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Jesse M. Shapiro (Contact Author)

Harvard University - Department of Economics ( email )

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Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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