News media as suppliers of narratives (and information)
Abstract
We present a model in which news media shape beliefs by providing information (signals about an exogenous state) and narratives (models of what determines outcomes). To amplify consumers' engagement, the media maximize their anticipatory utility. We characterize the optimal monopolistic media strategy, highlighting the synergy between false narratives and biased information. Consumer heterogeneity gives rise to a novel menu‐design problem due to an “equilibrium data externality” among consumers. The optimal menu includes false narratives, and can generate polarized beliefs and choices without any information transmission. False narratives and polarization also feature in a competitive version of our model, albeit coupled with complete information. Nevertheless, competition can make some consumers objectively worse off.
Fields of Study & Subjects
Narrative Theory and Analysis
Publication details
- Journal / source
- Theoretical Economics
- Publisher
- The Econometric Society
- Volume
- 21
- Issue
- 3
- Pages
- 928–972
- Publication date
- 1 January 2026
- Language
- EN