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An Economic Theory of Disinformation

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  • Harashima, Taiji

Abstract

The impacts of misinformation and disinformation have rarely been studied in economics. In this paper, I examine these impacts using a model constructed on the basis of the concept of ranked information. The value of information is changeable and differs across people; therefore, disinformation can be used as a tool to manipulate people’s behaviors. I first define misinformation and disinformation and then show the mechanism through which disinformation decreases efficiency by manipulating ranked information. Decreases in efficiency are observed as decreases in total factor productivity, lowered success rates of investment, and increased costs of bad speculations. In addition, disinformation generates economic rents and, as a result, increases inequality, possibly by a great deal. Furthermore, disinformation can cause large-scale economic fluctuations.

Suggested Citation

  • Harashima, Taiji, 2023. "An Economic Theory of Disinformation," MPRA Paper 116177, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116177
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    References listed on IDEAS

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    1. Bruce C. Greenwald & Joseph E. Stiglitz, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 229-264.
    2. Aaron S. Edlin & Joseph E. Stiglitz, 2008. "Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 609-620, Springer.
    3. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
    4. Ryan, Camille D. & Schaul, Andrew J. & Butner, Ryan & Swarthout, John T., 2020. "Monetizing disinformation in the attention economy: The case of genetically modified organisms (GMOs)," European Management Journal, Elsevier, vol. 38(1), pages 7-18.
    5. Joseph E. Stiglitz, 2017. "The Revolution of Information Economics: The Past and the Future," NBER Working Papers 23780, National Bureau of Economic Research, Inc.
    6. Harashima, Taiji, 2010. "Sustainable Heterogeneity: Inequality, Growth, and Social Welfare in a Heterogeneous Population," MPRA Paper 22521, University Library of Munich, Germany.
    7. Harashima, Taiji, 2009. "A Theory of Total Factor Productivity and the Convergence Hypothesis: Workers’ Innovations as an Essential Element," MPRA Paper 15508, University Library of Munich, Germany.
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    Cited by:

    1. Harashima, Taiji, 2023. "Economic Rents Extracted in the Process of Consumption," MPRA Paper 119012, University Library of Munich, Germany.

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    More about this item

    Keywords

    Disinformation; Economic fluctuation; Economic rent; Inequality; Misinformation; Ranked information;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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