The value of and demand for diverse news sources

Abstract

We study the value of and the demand for instrumentally-valuable information in a simple decision environment where signals are transparently polarized. We find that in both information aggregation and acquisition, subjects use sophisticated heuristics to counter the polarization in signals. A minority of subjects (15%) produce precise Bayesian reports, while an additional 59% of subjects produce unbiased reports even when exposed to polarized signals. Subjects placed in a market place of information rarely end up buying polarized signals and instead overwhelmingly opt for diverse information. The demand for diverse information increases as diverse information becomes more valuable and decreases as it becomes more expensive.