Competing for the Attention of Decision Makers

Christopher Cotton
Economics, University of Miami

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     Last modified: December 6, 2010
     Presentation date: 03/12/2011 9:00 AM in NH 1140, Session C
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Abstract
A decision maker wants to divide a budget between multiple agents, awarding a larger share of the budget to the “more-qualified” agents. Agents are privately informed about their own qualifications, which may be independent of their valuations. Although the decision maker can learn about qualifications by reviewing agents (e.g., meeting with agents, conducting interviews, calling references), he is time constrained and cannot review everyone before choosing a budget division. The way in which the decision maker decides which agents to review affects his ability to learn agent qualifications. Instead of assuming that the decision maker reviews agents randomly, or based on some observable characteristic, we introduce “Contests for Attention,” where agents submit payments (e.g., money, time, effort) in competition for the decision maker’s limited attention. When agents compete for attention, the decision maker learns about the qualifications by observing their efforts to gain attention (signaling), as well as by reviewing agents (direct revelation). It is always possible to design a contest for attention such that the decision maker always has correct beliefs about the qualifications of all agents, even though he only reviews some agents. In equilibrium, the decision maker chooses the same budget division that he would have chosen if he were able to review all agents.