The Economics of Information in a World of Disinformation: A Survey Part 2: Direct Communication

Joseph Stiglitz and Andrew Kosenko

No 32050, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper surveys the recent work on economics of information with endogenous information structures where individuals can directly communicate information with each other. We consider the theoretical work on cheap talk, Bayesian persuasion, and information design, and review the implications of information control and information abundance for mis and disinformation. The relationship between information and market power is particularly important when social media can amplify and maintain harmful fictions that lead to polarization and undermine not only markets, but democratic discourse. We review both the “rational” decision-making paradigm, as well as departures from it, such as cases where decision makers can choose what to know, can allocate their attention in different ways or have behavioral biases that influence their information processing. We note some important connections to legal and media studies and highlight key messages in nontechnical language.

JEL-codes: D82 D86 D9 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-com, nep-gth, nep-mic, nep-pke and nep-reg
Note: DAE POL TWP
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