Frank Stähler, Martin Richardson
Some Economics of Echo Chambers
- article PDF
- available
- 10.1628/jite-2021-0004
Due to a system change, access problems and other issues may occur. We are working with urgency on a solution. We apologise for any inconvenience.
Summary
Authors/Editors
Reviews
Summary
This paper analyzes competition between a media firm providing true information (news) and two fake-news providers that create echo chambers. Information from the media firm is uncertain but truthful, and consumers enjoy confirmation of their prior beliefs due to cognitive dissonances. We show that, even if real news is more valued than fake news, entry by fake-news providers becomes more profitable with increased variance of information. Furthermore, a public news provider makes entry for fake-news providers harder than for a profit-maximizing media firm.