People

Over the past decades the number of news outlets has increased dramatically, but the quality of news products has declined. We propose a model to reconcile these facts where consumers' attention allocation decisions not only depend on but also affect news outlets' quality choices. When competition is intensified by new entries, the informativeness of the news industry rises. Thus, attention is diverted from existing outlets, reducing their incentives to improve news quality, which begets a downward spiral. Furthermore, when attention becomes cheaper, a larger number of news outlets can be accommodated in equilibrium, but news quality still falls.

A university uses both early-stage selection outcome (high-school affiliation) and late-stage admission test outcome (standardized test scores) to select students. We use this model to study policies that have been proposed to combat inefficient gaming in college admissions. Increasing university enrollment size can exacerbate gaming and worsen the selection outcome. Abolishing standardized tests for university admissions increases gaming targeting high-school admissions and worsens the selection outcome, whereas eliminating high-school ability sorting may improve the university selection outcome under some cost conditions of gaming. Committing to a lower-powered selection scheme can improve the selection outcome by reducing gaming behaviors.

This paper provides a general analysis of signaling under double-crossing preferences with a continuum of types. There are natural economic environments where the indifference curves of two types cross twice, such that the celebrated single-crossing property fails to hold. Equilibrium exhibits a threshold type below which types choose actions that are fully revealing and above which they pool in a pairwise fashion, with a gap separating the actions chosen by these two sets of types. The resulting signaling action is quasi-concave in type. We also provide an algorithm to establish equilibrium existence by construction.