Deceptive Claims using Fake News Marketing: The Impact on Consumers
57 Pages Posted: 5 Oct 2018 Last revised: 28 Apr 2020
Date Written: September 12, 2018
Fake news marketing can be harmful if it misleads consumers to take actions they otherwise would not have taken (e.g., purchase an inferior product). However, if fake news marketing merely confirms existing beliefs without changing consumers’ actions, the extent of such harm is less severe. The main challenge in identifying the impact of fake news, is that we typically do not observe actions before and after the exposure to fake news. This paper exploits a unique setting where the FTC enabled the shutdown of 10 companies operating fake news websites that in reality were advertisements for various products such as acai cleanses and teeth whiteners. Using detailed browsing data of these product websites, I identify the extent of consumer interest, i.e., purchase propensity, in the presence and absence of fake news advertising. The findings indicate interest wanes after the shutdown of fake news, but there is substitution to other channels such as regular advertisements.
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