Staff Reports
Misinformation in Social Media: The Role of Verification Incentives
Number 1028
August 2022

JEL classification: D40, L10, L50

Authors: Gonzalo Cisternas and Jorge Vásquez

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.

Available only in PDF
AUTHOR DISCLOSURE STATEMENT(S)
Gonzalo Cisternas
I declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.

Jorge Vásquez
I declare that I have no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at https://www.newyorkfed.org/research/staff_reports/index.html.
By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.   Close