Truth, Lies, and Social Ties: When Image Concerns Fuel Fake News
We study how social image concerns shape information sharing among peers. Individuals receive a signal about a binary state with an observable direction and a veracity that can be learned only through costly verification, which depends on type. We analyze two motives: a desire to appear competent and a desire to signal one's worldview. For each, we characterize equilibrium sharing, derive implications for the relative diffusion of true versus false news, and compare welfare. The two motives can both generate greater sharing of false than factual news but imply distinct, testable patterns which we relate to existing empirical evidence.
econ.TH↗