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Fake News, Information Herds, Cascades, and Economic Knowledge

Butkovich, Lazarina and Butkovich, Nina and Devdariani, Saba and Plott, Charles R. and Seo, Han (2020) Fake News, Information Herds, Cascades, and Economic Knowledge. Public Finance Review, 48 (6). pp. 806-828. ISSN 1091-1421. doi:10.1177/1091142120960488.

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This article focuses on principles of information aggregation in the presence of false, public reports (fake news). The analysis explores news has been having a public goods feature characterized by models of information and economic efficiency. The analysis is not tied to any particular theory about how or why unreliable news emerges. The reports could be purposeful deception, intentions to mislead or profit motivated responses to decision biases of readers. A well-known and widely studied “cascade” experiment is used to illustrate principles that provide links to standard economic models. News is modeled as an aggregation of a simple, fixed chain of decentralized observations and reports about an underlying, unknown state of nature. The personal value of an individual’s decision depends on both the decision and the underlying state of nature. The information about the state used in the decision can reflect private observations or the “news” about the decisions of others. The experiments demonstrate that aggregated information is dependent on accumulated trust in news sources and has value as a special form of public goods.

Item Type:Article
Related URLs:
URLURL TypeDescription ItemWorking Paper
Plott, Charles R.0000-0001-8363-3628
Seo, Han0000-0002-5116-3286
Additional Information:© 2020 SAGE Publications. Article first published online: October 14, 2020; Issue published: November 1, 2020. 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.
Funding AgencyGrant Number
John Templeton Foundation58067
Subject Keywords:information aggregation; cascades; information source; information efficiency
Issue or Number:6
Classification Code:JEL Classification: D1, D83, L1, H4, H41, K19, L15, L86, L96
Record Number:CaltechAUTHORS:20220209-296325000
Persistent URL:
Official Citation:Butkovich L, Butkovich N, Devdariani S, Plott CR, Seo H. Fake News, Information Herds, Cascades, and Economic Knowledge. Public Finance Review. 2020;48(6):806-828. doi:10.1177/1091142120960488
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:113343
Deposited By: George Porter
Deposited On:09 Feb 2022 22:14
Last Modified:09 Feb 2022 22:14

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