Competing to Persuade a Rationally Inattentive Agent

Abstract

Firms strategically disclose product information in order to attract consumers, but recipients often find it costly to process all of it, especially when products have complex features. We study a model of competitive information disclosure by two senders, in which the receiver may garble each sender's experiment, subject to a cost increasing in the informativeness of the garbling. As long as attention costs are not too low, there is an interval of prior means over which it is an equilibrium for both senders to offer full information, which interval expands as attention costs grow. Information on one sender substitutes for information on the other, which allows the receiver to nullify the profitability of a deviation. We thus provide a novel channel through which competition encourages information disclosure.