Misinformation in Social Media: The Role of Verification Incentives

Gonzalo Cisternas and Jorge Vásquez
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Jorge Vásquez: https://www.smith.edu/academics/faculty/jorge-vasquez

No 1028, Staff Reports from Federal Reserve Bank of New York

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.

Keywords: misinformation; news verification; social media (search for similar items in EconPapers)
JEL-codes: D40 L10 L50 (search for similar items in EconPapers)
Pages: 64
Date: 2022-08-01
New Economics Papers: this item is included in nep-mic
Note: Revised November 2024.
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