Creating confusion

Chris Edmond and Yang K. Lu

Journal of Economic Theory, 2021, vol. 191, issue C

Abstract: We develop a model in which a politician seeks to prevent a group of citizens from making informed decisions. The politician can manipulate information at a cost. The citizens are rational and internalize the politician's incentives. In the unique equilibrium of the game, the citizens' beliefs are unbiased but endogenously noisy. We interpret the social media revolution as a shock that simultaneously (i) improves the underlying, intrinsic precision of the citizens' information, but also (ii) reduces the politician's costs of manipulation. We show that there is a critical threshold such that if the costs of manipulation fall enough, the social media revolution makes the citizens worse off despite the underlying improvement in their information.

Keywords: Persuasion; Bias; Noise; Social media; Fake news; Alternative facts (search for similar items in EconPapers)
JEL-codes: C7 D7 D8 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:191:y:2021:i:c:s0022053120301381

DOI: 10.1016/j.jet.2020.105145

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