Consumer Belief Polarization and News Provision

Consumers seek information to improve their understanding about the true state of theworld. The value of such information typically depends on its accuracy, and thesubsequent reduction in consumer uncertainty. To meet consumers’ needs, news mediafirms can invest in investigation to produce accurate information. However, polarizationin consumers’ beliefs poses challenges to the provision of accurate information. In thisproject, we study the impact of polarization on news accuracy. Our preliminary analysis reveals that either an increase in the belief intensity of extreme consumers or anincrease in the share of extreme consumers can make reporting less accurate. This isbecause polarization makes consumers more certain about the state of the world,reducing their perceived value of news. Interestingly, polarization may lead amonopolistic firm to change its target audience, increasing its accuracy under certainconditions. We also find that a larger share of extreme consumers can result in higheraccuracy under competition. We plan to build on the preliminary analysis andincorporate several important factors to further illuminate the impact of polarization. Wealso plan to explore the implications of consumer heterogeneity in valuation for news,their objectives in news consumption, as well as media firms’ revenue models. Ourresults will provide insights for media firm managers on how to position theirinformation products amid increasing consumer polarization and offer guidance forpolicymakers to improve the information environment.