probability 1 of being remembered. Denote this probability of recall as p v, tc In this paper, we examine w hat these two different assumpt ions about reader psy. chology imply for media bias. We consider bot h Bayesian and categorical readers not because we think readers are one or the other type. Instead this split allows us t make clear w hich results are driven by reader psy chology and which are driven by the truct ure of competit ion it self 2.2 Newspaper payoffs A newspapers payoff depends on several factors. First, it depends on whet her the newspaper is perceived to be good, since presumably good newspapers sell better. The paper receives a payoff T if it is t hought to be good and zero ot herwise, where T t he capit alized value of the increment al profits from being remembered. Second, the newspaper may have an ideology T which is either 0, +l or-1. A newspaper wit h an ideology of +l prefers to report posit ive stories whereas a newspaper with an I prefers to report negat ive stories. We assume the newspaper recev ies an benefit equal to BTv. In this sense B measures the int ensity of t he newspaper's ideology We furt her assume that readers form inferences ignoring the newspaper's ideolog o When readers are Bayesian, there is no confusion of good or bad newspapers since stories are remembered. A good newspaper no mat ter w hat it reports has its story remembered and is recognized as good. And by assumption a bad newspaper can never appear good. a good newspaper therefore receives a payoff of BTv-c(n-v) and a bad newspaper receives a payoff of When readers are categorical, however, good newspapers can be confused with bad ones. If a good newspaper's story is forgotten, t hought of bad one This assumption is merely to simplify the calcul ations. At the opposite extreme, readers would know and recognize these ideologies and would de- bi as stories before incorporating them into beliefs. Media biases would have no effect on beliefs at all. Our assumption is a simple version of the more realistic case where readers partly but not fully recognize the biasprobability 1 of being remembered. Denote this probability of recall as (; t^ c). In this paper, we examine what these two dierent assumptions about reader psy￾chology imply for media bias. We consider both Bayesian and categorical readers not because we think readers are one or the other type. Instead this split allows us to make clear which results are driven by reader psychology and which are driven by the structure of competition itself. 2.2 Newspaper Payos A newspaper's payo depends on several factors. First, it depends on whether the newspaper is perceived to be good, since presumably good newspapers sell better. The paper receives a payo  if it is thought to be good and zero otherwise, where  is the capitalized value of the incremental prots from being remembered. Second, the newspaper may have an ideology  which is either 0, +1 or ￾1. A newspaper with an ideology of +1 prefers to report positive stories whereas a newspaper with an ideology of ￾1 prefers to report negative stories. We assume the newspaper recevies an ideological benet equal to . In this sense  measures the intensity of the newspaper's ideology. We further assume that readers form inferences ignoring the newspaper's ideology.10 When readers are Bayesian, there is no confusion of good or bad newspapers since all stories are remembered. A good newspaper no matter what it reports has its story remembered and is recognized as good. And by assumption a bad newspaper can never appear good. A good newspaper therefore receives a payo of:  +  ￾ c(n ￾ ) and a bad newspaper receives a payo of:  ￾ c(n ￾ ) When readers are categorical, however, good newspapers can be confused with bad ones. If a good newspaper's story is forgotten, it is thought of as a bad one. 10This assumption is merely to simplify the calculations. At the opposite extreme, readers would know and recognize these ideologies and would de-bias stories before incorporating them into beliefs. Media biases would have no eect on beliefs at all. Our assumption is a simple version of the more realistic case where readers partly but not fully recognize the bias. 8