Vague news and fake news

Lotte Swank

Journal of Economic Behavior & Organization, 2023, vol. 215, issue C, 89-106

Abstract: I consider a situation in which citizens consult a report by the media to learn the state of the world. Besides the true state of the world, the report can contain two types of inaccuracies: persistent bias following from the media's ideology and random noise. Employing a theoretical model, I show that citizens perform additional investigations if there is much variance in noise. In contrast, citizens are not affected by persistent bias as they can anticipate it. These predictions are confirmed through an empirical analysis of the start of the COVID-19 outbreak, in which I utilize sentiment data to differentiate persistent bias from noise in media reports. The results suggest that media quality is more of a concern than media neutrality.

Keywords: Persistent bias; Noise; Media investigation; Sentiment data; COVID-19 (search for similar items in EconPapers)
JEL-codes: D83 L82 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:215:y:2023:i:c:p:89-106

DOI: 10.1016/j.jebo.2023.09.001

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