Authors: Gonzalo Cisternas and Jorge Vásquez
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JEL classification: D40, L10, L50
Authors: Gonzalo Cisternas and Jorge Vásquez
We develop a model in which the prevalence and sharing of misinformation endogenously arise from the interaction between (i) users’ decisions to verify and share news of unknown truthfulness and (ii) producers’ choices to generate fake content. We use the model to examine how policies intended to combat misinformation affect users’ incentives to engage in costly news verification. Via this channel, unintended effects may emerge from: lowering verification costs borne by users; disrupting the supply of fake content; and introducing imperfect filters. We provide sensitivity measures, akin to demand elasticities, to evaluate these effects, and make predictions about market outcomes based on observable characteristics such as users’ age and popularity, as well as deeper parameters such as users’ gains and losses of sharing news.