colorful but misleading language and images that support the story. These types of informat ion manipulat ion need not involve inaccuracies, but at the same time address"t he narrat ive imperat ive Modificat ion is cost ly to the newspaper. First, it requires cost ly story-telling and research necessary to bolster t he t heme of the report. Second, and far more import ant ly, bot h the newspapers and the reporters that work for them care about accuracy, and excessive modificat ion of the news raises the risk of being wrong. Let c(n-v)denote the cost of modify ing the news We assume that c(0)=0 and that sign(c(x))=sign(x)>0 (x)=0, limr-1 c(x)=l and limx-0 c(x)=0. These assumpt ions mean that manipulat ion, in either direct ion, is costly to the newspaper In the third period, the e reader rea the story. He then combines what he reads ith his priors to form an assessment of t. Define this belief to be t. After beliefs are formed, the reader may forget the story or not. If he remembers the story, he presumes the newspaper is good. If he does not he presumes the paper is bad 2,1 Re ader p sy chology The model turns on how we assume readers form beliefs and remember infor mat ion. At one extreme, we might suppose people form Bayesian beliefs and have perfect recall In this case, after reading the news v, the individual updates and forms beliefs t=r+k1(-r) where ki is a const ant that equals aton But t his bayesian framework does not allow us to t hink about the media's desire t tell a story. To understand readers demand for "stories", we consider a model where readers t hink in coarse categories rat her that in precise fine-tuned priors (Mullainat ha 2002). Coarse categories capt ure the idea t hat readers carry away general impressions of the sit uat ion rat her than tracking all the det ails. In our simple case of a one- dimensional signal, the coarse categories may be somet hing like "goodand"bad Clinton is eit her a persecuted mo dern man or a villain. Wen Ho Lee is a spy or a victim. In more complicated sit uat ions wit h more dimensions, the categories would beor use colorful but misleading language and images that support the story. These types of information manipulation need not involve inaccuracies, but at the same time address \the narrative imperative". Modication is costly to the newspaper. First, it requires costly story-telling and research necessary to bolster the theme of the report. Second, and far more importantly, both the newspapers and the reporters that work for them care about accuracy, and excessive modication of the news raises the risk of being wrong. Let c(n￾) denote the cost of modifying the news We assume that c(0) = 0 and that sign(c 0(x)) = sign(x) > 0 and c 00(x) = 0, limx!1 c(x) = 1 and limx!0 c(x) = 0. These assumptions mean that manipulation, in either direction, is costly to the newspaper. In the third period, the reader reads the story. He then combines what he reads with his priors to form an assessment of t. Dene this belief to be t^. After beliefs are formed, the reader may forget the story or not. If he remembers the story, he presumes the newspaper is good. If he does not he presumes the paper is bad. 2.1 Reader Psychology The model turns on how we assume readers form beliefs and remember information. At one extreme, we might suppose people form Bayesian beliefs and have perfect recall. In this case, after reading the news , the individual updates and forms beliefs: t^= r + k1( ￾ r) where k1 is a constant that equals 2n 2 r+2n . But this Bayesian framework does not allow us to think about the media's desire to tell a story. To understand reader's demand for \stories", we consider a model where readers think in coarse categories rather that in precise ne-tuned priors (Mullainathan 2002). Coarse categories capture the idea that readers carry away general impressions of the situation rather than tracking all the details. In our simple case of a one￾dimensional signal, the coarse categories may be something like \good" and \bad". Clinton is either a persecuted modern man or a villain. Wen Ho Lee is a spy or a victim. In more complicated situations with more dimensions, the categories would be 6