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Information, Fake News, and Social Networks

Funding: German Research Foundation (DFG) via grant FO 1272/2-1
Members: Manuel FÖRSTER
Duration: 2020 - 2023


The phenomenon of "fake news" has recently received a lot of attention, for good reasons. The rise of social media as an important source of news for many people and recent empirical evidence from the 2016 US presidential election have demonstrated the potential of fake news to undermine trust in the democratic process and democratic institutions. Ultimately, fake news could pose a threat to democracy. This research project combines economic theory with experimental tests to thoroughly investigate this phenomenon. Fake news is news articles that are intentionally and verifiably false, and could mislead readers. The aim of this project is to develop a comprehensive theory of fake news.

In the first part of the project, I will lay the theoretical foundations for studying fake news. Fake news comprises in particular the outright fabrication of news stories, which sets it apart from misreporting of given private information as in classic "cheap talk". I will introduce a theoretical framework of communication in sender-receiver games with an uncertain information structure that allows for fabricated information. Building on these results, I will then develop a formal theory of fake news. I aim at understanding which settings and behavioral patterns favor the incidence of fake news. In the second part of the project, I will embed the framework on fake news into a network to complete the analysis. Here, the aim is to understand which behavioral patterns favor the spreading of fake news in social networks, and to identify possible policy responses to the problem. Laboratory experiments will complement the theoretical insights and help to improve the derived theories.

Ultimately, this research will advance the economic understanding of strategic communication under uncertain information structures and of the phenomenon of fake news.

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