Why do advertisements provide biased information?

Answer 1

Experts face a problem getting paid for their opinions. Consumers are uncertain of the quality of the

opinion before it is revealed, and they have the option of opportunistically underpaying after it is revealed.

Two common solutions to this problem are the advertising model, in which experts bundle content with

advertising, and the subscription model, in which experts charge for access and subscription fees are based

on reputation. In this paper, we study a third model which we call the bias model: the expert bundles

information with bias and payment comes in the form of influence over consumers' actions. The expert can

either bias information to match her own tastes or business interests, or she can sell the bias to another

party. In situations where direct payments for bias are unseemly, one might expect the bundling of bias with

other services, such as advertising.