IDEAS home Printed from https://ideas.repec.org/p/fip/fednsr/94636.html
   My bibliography  Save this paper

Misinformation in Social Media: The Role of Verification Incentives

Author

Abstract

We develop a model of a platform featuring producers of fake news as well as users who can share content and verify it at a cost. Since users supply news to other users, their actions affect fake news prevalence and strategic complementarities can arise: high levels of verification can lead to low prevalence of fake content, in turn inducing more unverified sharing that sustains high levels of verification. Equilibria in this market then arise as intersection points between a standard supply curve and a novel correspondence that generalizes a demand function to account for the users’ strategic environment. Equilibria exhibiting more fake news production and diffusion can be consistent with higher user welfare due to the strong verification complementarities at play. We also quantify externalities associated with users affecting the average quality of news items in the platform and examine the effects on outcomes of (i) lowering verification costs, (ii) certifying verified content, and (iii) using algorithmic filters.

Suggested Citation

  • Gonzalo Cisternas & Jorge Vásquez, 2022. "Misinformation in Social Media: The Role of Verification Incentives," Staff Reports 1028, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:94636
    Note: Revised November 2024.
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1028.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://www.newyorkfed.org/research/staff_reports/sr1028.html
    File Function: Summary
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    2. Elena Quercioli & Lones Smith, 2015. "The Economics of Counterfeiting," Econometrica, Econometric Society, vol. 83(3), pages 1211-1236, May.
    3. Alessandro Bonatti & Gonzalo Cisternas, 2020. "Consumer Scores and Price Discrimination," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(2), pages 750-791.
    4. Daniel Ershov & Juan S Morales, 2024. "Sharing News Left and Right: Frictions and Misinformation on Twitter," The Economic Journal, Royal Economic Society, vol. 134(662), pages 2391-2417.
    5. Renee Bowen & Danil Dmitriev & Simone Galperti, 2021. "Learning from Shared News: When Abundant Information Leads to Belief Polarization," NBER Working Papers 28465, National Bureau of Economic Research, Inc.
    6. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," NBER Working Papers 23089, National Bureau of Economic Research, Inc.
    7. Becker, Gary S, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1109-1116, October.
    8. Gordon Pennycook & Ziv Epstein & Mohsen Mosleh & Antonio A. Arechar & Dean Eckles & David G. Rand, 2021. "Shifting attention to accuracy can reduce misinformation online," Nature, Nature, vol. 592(7855), pages 590-595, April.
    9. Bowen, T. Renee & Galperti, Simone & Dmitriev, Danil, 2021. "Learning from Shared News: When Abundant Information Leads to Belief Polarization," CEPR Discussion Papers 15789, C.E.P.R. Discussion Papers.
    10. Marta Serra-Garcia & Uri Gneezy, 2021. "Mistakes, Overconfidence, and the Effect of Sharing on Detecting Lies," American Economic Review, American Economic Association, vol. 111(10), pages 3160-3183, October.
    11. Gordon Pennycook & Adam Bear & Evan T. Collins & David G. Rand, 2020. "The Implied Truth Effect: Attaching Warnings to a Subset of Fake News Headlines Increases Perceived Accuracy of Headlines Without Warnings," Management Science, INFORMS, vol. 66(11), pages 4944-4957, November.
    12. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 211-236, Spring.
    13. Yiangos Papanastasiou, 2020. "Fake News Propagation and Detection: A Sequential Model," Management Science, INFORMS, vol. 66(5), pages 1826-1846, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tuval Danenberg & Drew Fudenberg, 2024. "Endogenous Attention and the Spread of False News," Papers 2406.11024, arXiv.org.
    2. Ozan Candogan & Kimon Drakopoulos, 2020. "Optimal Signaling of Content Accuracy: Engagement vs. Misinformation," Operations Research, INFORMS, vol. 68(2), pages 497-515, March.
    3. Mohamed Mostagir & James Siderius, 2022. "Learning in a Post-Truth World," Management Science, INFORMS, vol. 68(4), pages 2860-2868, April.
    4. Dana Sisak & Philipp Denter, 2024. "Information Sharing with Social Image Concerns and the Spread of Fake News," Papers 2410.19557, arXiv.org, revised Oct 2024.
    5. Eugenio Levi & Michael Bayerlein & Gianluca Grimalda & Tommaso Reggiani, 2023. "Narratives on migration and political polarization: How the emphasis in narratives can drive us apart," MUNI ECON Working Papers 2023-07, Masaryk University.
    6. Denter, Philipp & Ginzburg, Boris, 2021. "Troll Farms and Voter Disinformation," MPRA Paper 109634, University Library of Munich, Germany.
    7. Emeric Henry & Ekaterina Zhuravskaya & Sergei Guriev, 2022. "Checking and Sharing Alt-Facts," American Economic Journal: Economic Policy, American Economic Association, vol. 14(3), pages 55-86, August.
    8. Lara Marie Berger & Anna Kerkhof & Felix Mindl & Johannes Münster, 2023. "Debunking “Fake News” on Social Media: Short-Term and Longer-Term Effects of Fact Checking and Media Literacy Interventions," CESifo Working Paper Series 10576, CESifo.
    9. Assenza, Tiziana & Cardaci, Alberto & Huber, Stefanie, 2024. "Fake News: Susceptibility, Awareness and Solutions," TSE Working Papers 24-1519, Toulouse School of Economics (TSE), revised Nov 2024.
    10. Jiexun Li & Xiaohui Chang, 2023. "Combating Misinformation by Sharing the Truth: a Study on the Spread of Fact-Checks on Social Media," Information Systems Frontiers, Springer, vol. 25(4), pages 1479-1493, August.
    11. Khan, Nuzaina & Rand, David & Shurchkov, Olga, 2024. "He Said, She Said: Who Gets Believed When Spreading (Mis)Information," IZA Discussion Papers 17282, Institute of Labor Economics (IZA).
    12. Lara Berger & Anna Kerkhof & Felix Mindl & Johannes Münster, 2023. "Debunking "Fake News" on Social Media: Short-Term and Longer-Term Effects of Fact Checking and Media Literacy Interventions," ECONtribute Discussion Papers Series 262, University of Bonn and University of Cologne, Germany.
    13. Cameron Martel & Mohsen Mosleh & David G. Rand, 2021. "You’re Definitely Wrong, Maybe: Correction Style Has Minimal Effect on Corrections of Misinformation Online," Media and Communication, Cogitatio Press, vol. 9(1), pages 120-133.
    14. Kris Hartley & Minh Khuong Vu, 2020. "Fighting fake news in the COVID-19 era: policy insights from an equilibrium model," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(4), pages 735-758, December.
    15. Marcel Caesmann & Janis Goldzycher & Matteo Grigoletto & Lorenz Gschwent, 2024. "Censorship in democracy," ECON - Working Papers 446, Department of Economics - University of Zurich.
    16. Gritsenko, Daria, 2024. "Advancing UN digital cooperation: Lessons from environmental policy and governance," World Development, Elsevier, vol. 173(C).
    17. Andranik Tumasjan, 2024. "The many faces of social media in business and economics research: Taking stock of the literature and looking into the future," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 389-426, April.
    18. Mohsen Mosleh & David G. Rand, 2022. "Measuring exposure to misinformation from political elites on Twitter," Nature Communications, Nature, vol. 13(1), pages 1-9, December.
    19. Sarah Spiekermann & Hanna Krasnova & Oliver Hinz & Annika Baumann & Alexander Benlian & Henner Gimpel & Irina Heimbach & Antonia Köster & Alexander Maedche & Björn Niehaves & Marten Risius & Manuel Tr, 2022. "Values and Ethics in Information Systems," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 64(2), pages 247-264, April.
    20. Samuel S. Santos & Marcelo C. Griebeler, 2022. "Can fact-checkers discipline the government?," Economics Bulletin, AccessEcon, vol. 42(3), pages 1498-1509.

    More about this item

    Keywords

    misinformation; news verification; social media;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:94636. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.