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Creating Confusion "Abstract: We develop a model in which a politician seeks to prevent people from making informed decisions. The politician can manipulate information at a cost, but cannot commit to an information structure. The receivers are rational and internalize the politician's incentives. In the unique equilibrium of the game, the receivers' beliefs are unbiased but endogenously noisy. We use this model to interpret the rise of social media. We argue that social media simultaneously (i) improves the underlying, intrinsic precision of the receivers' information but also (ii) reduces the politician's costs of manipulation. We show that there is a critical threshold such that if the costs of manipulation fall enough, the politician is better off and the receivers are worse off, despite the underlying improvement in their information. But if the costs of manipulation do not fall too much, and if the receivers are also sufficiently well coordinated, the manipulation backfires. In this scenario, the politician would want to invest in commitment devices that prevent them from manipulating information."

Author

Listed:
  • Chris Edmond

    (Department of Economics, The University of Melbourne)

  • Yang K Lu

    (Hong Kong University of Science and Technology.)

Abstract

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Suggested Citation

  • Chris Edmond & Yang K Lu, 2018. "Creating Confusion "Abstract: We develop a model in which a politician seeks to prevent people from making informed decisions. The politician can manipulate information at a cost, but cannot comm," Department of Economics - Working Papers Series 2043, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:2043
    as

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    File URL: https://fbe.unimelb.edu.au/__data/assets/pdf_file/0007/2928463/2043_Edmond-Lu-Creating-Confusion-November-2018.pdf
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    References listed on IDEAS

    as
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    3. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," NBER Working Papers 23089, National Bureau of Economic Research, Inc.
    4. Scott Gehlbach & Alberto Simpser, 2015. "Electoral Manipulation as Bureaucratic Control," American Journal of Political Science, John Wiley & Sons, vol. 59(1), pages 212-224, January.
    5. Chris Edmond, 2013. "Information Manipulation, Coordination, and Regime Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1422-1458.
    6. Egorov, Georgy & Guriev, Sergei & Sonin, Konstantin, 2009. "Why Resource-poor Dictators Allow Freer Media: A Theory and Evidence from Panel Data," American Political Science Review, Cambridge University Press, vol. 103(4), pages 645-668, November.
    7. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 211-236, Spring.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    persuasion; slant; bias; noise; social media; fake news; alternative facts.;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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