Working Paper: NBER ID: w26409
Authors: Gene M. Grossman; Elhanan Helpman
Abstract: Misinformation pervades political competition. We introduce opportunities for political candidates and their media supporters to spread fake news about the policy environment and perhaps about parties' positions into a familiar model of electoral competition. In the baseline model with full information, the parties' positions converge to those that maximize aggregate welfare. When parties can broadcast fake news to audiences that disproportionately include their partisans, policy divergence and suboptimal outcomes can result. We study a sequence of models that impose progressively tighter constraints on false reporting and characterize situations that lead to divergence and a polarized electorate.
Keywords: Electoral Competition; Fake News; Misinformation; Political Economy
JEL Codes: D72; D78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fake news (Y50) | party positions (D72) |
| fake news (Y50) | electoral outcomes (K16) |
| party positions (D72) | electoral outcomes (K16) |
| fake news (Y50) | polarized electorate (D72) |
| low fraction of informed voters (D72) | policy positions divergence (D72) |
| misinformation (D83) | extreme reports (Y10) |