Microeconomics: Asymmetric & Private Information eJournal | 2019
The Newsroom Dilemma
Abstract
Conventional wisdom suggests that competition in the modern digital environment is pushing media outlets towards early release of less accurate information. We show that this is not necessarily the case. We argue that two opposing forces determine the resolution of the speed-accuracy tradeoff: preemption and reputation. More competitive environments may be more conducive to reputation building. Therefore, it is possible to have better reporting in a more (Internet-driven) competitive world. However, we show that the audience may be worse-off due to another consequence of the Internet – outlets better initial information. Finally, we show how a source may exploit the speed-accuracy tradeoff to get unverified facts out to the audience quickly.