Shared Knowledge and Competition for Attention in Information Markets*

Information consumers seek to learn about world events, but often also what others know about those events. Capturing consumers’ attention is essential for information suppliers to thrive in the market. We find that competition for attention leads to homogeneity of information sources—in terms of accuracy and clarity—even when consumers would demand heterogeneous sources. Their equilibrium type exhibits higher clarity as consumers care more about predicting others’ beliefs, while this desire does not affect accuracy. We also find that whenever attention becomes the “currency” whereby consumers pay for information, it causes novel market inefficiencies, whose form and size depend on the consumers’ interest in others’ beliefs.