t he newspaper. This prejudice could be shaped by basic beliefs about how the world operates. For example, in the Wen Ho Lee case readers may have st arted wit h the presumpt ion that the Chinese are likely to be spy ing on the U.S. Alternat ively, this signal may it self be the result of ot her newspaper stories or rumors the person has heard. In short, r is summary of the reader's prior conv ictions and prejudices before he reads the newspaper. The signal r is a noisy est imate of the trut h, so t+er here er is distributed normally N(O, a2). The reader uses this signal to update his beliefs The newspaper may also receive a signal. Good newspapers receive a signal for sure d bad news denoted n and equals the truth plus some noise: n =t+en, where en is normally distributed wit h variance on. Though we make n uni-dimensional for simplicity, one can think of n as really a bundle of facts In the second period, t he newspaper decides what to report. A bad newspaper has no news to report. A good newspaper, in contrast, has news n which it may modify reporting. Let s denote this modificat ion, so the paper reports v =n +s We are t hinking of a newspaper receiving a lot of fact s about a particular issue, all potentially point ing in somew hat different direct ions, and needing to distill them int a memorable story. We think of the modificat ion s not as invention or fabricat ion of new facts, but rather as a way to emphasize some facts, and de-emphasize ot hers, so the readers extract from the story a sy nt, hesized bot tom line Manipulation of informat ion can take a variety of forms. In some countries, news papers just make up facts to corroborate t heir stories, but we do not believe that this phenomenon is import ant in the U.S. Rat her, we are modeling the sit uation where a newspaper biases stories in more subt le ways. Reports can ignore or omit information inconsistent with t he message of t he story, build up"informat ion sources that corrob orate the story, ignore or undermine information sources that contradict the message. We form ally study this second case when we r multiple newthe newspaper. This prejudice could be shaped by basic beliefs about how the world operates. For example, in the Wen Ho Lee case readers may have started with the presumption that the Chinese are likely to be spying on the U.S. Alternatively, this signal may itself be the result of other newspaper stories or rumors the person has heard.5 In short, r is summary of the reader's prior convictions and prejudices before he reads the newspaper. The signal r is a noisy estimate of the truth, so r = t + er where er is distributed normally N(0; 2 r ). The reader uses this signal to update his beliefs. The newspaper may also receive a signal. Good newspapers receive a signal for sure and bad newspapers receive no signal. The signal they receive is denoted n and equals the truth plus some noise: n = t + en, where en is normally distributed with variance 2n. Though we make n uni-dimensional for simplicity, one can think of n as really a bundle of facts. In the second period, the newspaper decides what to report. A bad newspaper has no news to report. A good newspaper, in contrast, has news n which it may modify before reporting. Let s denote this modication, so the paper reports  = n + s. We are thinking of a newspaper receiving a lot of facts about a particular issue, all potentially pointing in somewhat dierent directions, and needing to distill them into a memorable story. We think of the modication s not as invention or fabrication of new facts, but rather as a way to emphasize some facts, and de-emphasize others, so the readers extract from the story a synthesized bottom line. Manipulation of information can take a variety of forms. In some countries, news￾papers just make up facts to corroborate their stories, but we do not believe that this phenomenon is important in the U.S. Rather, we are modeling the situation where a newspaper biases stories in more subtle ways. Reports can ignore or omit information inconsistent with the message of the story, \build up" information sources that corrob￾orate the story, ignore or undermine information sources that contradict the message, 5We formally study this second case when we consider multiple newspapers. 5