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Attention Manipulation and Information Overload

Sep 2017
Working Paper
By  Petra Persson
Limits on consumer attention give firms incentives to manipulate prospective
buyers’ allocation of attention. This paper models such attention manipulation
and shows that it limits the ability of disclosure regulation to improve
consumer welfare. Competitive information supply, from firms competing for
attention, can reduce consumers’ knowledge by causing information overload.
A single firm subjected to a disclosure mandate may deliberately induce such
information overload to obfuscate financially relevant information, or engage in
product complexification to bound consumers’ financial literacy. Thus, disclosure
rules that would improve welfare for agents without attention limitations
can prove ineffective for consumers with limited attention. Obfuscation suggests
a role for rules that mandate not only the content but also the format of
disclosure; however, even rules that mandate "easy-to-understand" formats can
be ineffective against complexification, which may call for regulation of product
Publication Keywords: 
Information Overload
Disclosure regulation
Consumer Protection