Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266112 
Year of Publication: 
2022
Series/Report no.: 
Staff Report No. 1028
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
We develop a model of misinformation wherein users' decisions to verify and share news of unknown truthfulness interact with producers' choices to generate fake content as two sides of a market that balance to deliver an equilibrium prevalence and pass-through of fake news. We leverage the tractability of the model to examine the efficacy of various policies intended to combat misinformation that are in place currently, stressing how these may nontrivially interact with users' incentives: news verification is a costly activity. Our analysis emphasizes the importance of examining users' and producers' decisions jointly, as well as of evaluating how policies interact with one another. It also provides sensitivity measures that are key for policy evaluation.
Subjects: 
misinformation
news verification
social media
JEL: 
D40
L10
L50
Document Type: 
Working Paper

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