Timothy Van Zandt
Professor of Economics
As the costs of generating and transmitting information fall, the main bottlenecks in communication networks are becoming the human receivers who are overloaded with information. For networks of targeted communication, this paper discusses the meaning of information overload, provides a theoretical treatment of its causes, and examines mechanisms for allocating the attention of receivers.Mechanisms for the latter include surcharges on communication and auctions. These increase the cost of sending messages and shift the task of screening messages from the receivers to the senders. This shift may benefit both the receivers and the senders because the senders know the contents of the messages whereas the receivers do not.The author shows that if the communication cost is low then an increase in the communication cost benefits most receivers. The increase benefits all the senders if either the extra cost is a tax that is redistributed to them as lump-sum transfers, or the senders - information about the receivers is sufficiently accurate.