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Published February 9, 2022 | Accepted Version
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Fake News, Information Herds, Cascades, and Economic Knowledge

Abstract

The paper addresses the issue of "fake news" through a well-known and widely studied experiment that illustrates possible uses of economics and game theory for understanding the phenomenon. Public news is viewed as an aggregation of decentralized pieces of valuable information about complex events. Success of news systems rests on accumulated investment in trust in news sources. By contrast, fake news involves cases in which news source reliability is not known. The experiment demonstrates how fake news can destroy both the investment in trust and also the benefits that successful news systems provide.

Additional Information

The insights of David Grether and the help of B. Atsavapranee, are gratefully acknowledged. All experimental programs were designed by Travis Maron. The financial support of the John Templeton Foundation is gratefully acknowledged.

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Accepted Version - SSRN-id3217603.pdf

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Additional details

Created:
August 19, 2023
Modified:
January 15, 2024