Persuasion under the Influence of Fake News: Competitive Persuasion under Source Uncertainty

Sangjun Yea and Daeyoung Jeong
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Sangjun Yea: Korea Institute for International Economic Policy
Daeyoung Jeong: Yonsei University

No 2026rwp-295, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: We study Bayesian persuasion with source uncertainty: a receiver observes one message but cannot tell whether it came from a related news sender, who commands an informative technology, or a fake news sender, whose signals are state-independent. Using a Rothschild-Stiglitz approach, we characterize equilibrium and identify the threshold prominence at which fake news becomes persuasive. Prominent fake news dilutes informative signals, but a sufficiently credible sender preserves influence by raising precision. This self-disciplining effect raises welfare: paradoxically, within the persuasive regime, greater prominence of fake news improves the informational environment and leaves voters better informed ex-ante.

Keywords: Fake News; Social Media; Bayesian Persuasion; Sequential Persuasion (search for similar items in EconPapers)
JEL-codes: D72 D82 D83 L82 (search for similar items in EconPapers)
Pages: 49pages
Date: 2026-08
New Economics Papers: this item is included in nep-mic
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