Can Prompting Investors to be in a Deliberative Mindset Reduce Their Reliance on Fake News?

47 Pages Posted: 9 Sep 2019 Last revised: 20 Feb 2021

See all articles by Stephanie M. Grant

Stephanie M. Grant

University of Washington

Frank D. Hodge

University of Washington - Michael G. Foster School of Business

Samantha C. Seto

University of Washington, Michael G. Foster School of Business, Students

Date Written: February 19, 2021

Abstract

Using an experiment, we examine if prompting investors to be in a deliberative mindset reduces
their reliance on financial news that is later revealed to be fake. Consistent with theory, results
show that investors reduce their reliance on news revealed to be fake, and that this reduction is
magnified for investors who were previously prompted to be in a deliberative mindset.
Importantly, results also reveal that prompting investors to be in a deliberative mindset does not
cause investors to discount news that is later revealed to be true. Thus, our deliberative mindset
intervention did not result in an opportunity cost, which is important given our capital market
setting. Our study extends research on fake news in financial markets, provides new evidence on
how prompting individuals to be in a deliberative mindset can reduce the continued influence
effect, and has practical implications for individuals obtaining company information through
information intermediaries.

Keywords: fake news; deliberative mindset; continued influence effect; investor judgments

JEL Classification: G11, M40, M41, C91, D83

Suggested Citation

Grant, Stephanie M. and Hodge, Frank Douglas and Seto, Samantha C, Can Prompting Investors to be in a Deliberative Mindset Reduce Their Reliance on Fake News? (February 19, 2021). Available at SSRN: https://ssrn.com/abstract=3444228 or http://dx.doi.org/10.2139/ssrn.3444228

Stephanie M. Grant (Contact Author)

University of Washington ( email )

Box 353200
Seattle, WA 98195-3200
United States
(206) 543-2904 (Phone)

Frank Douglas Hodge

University of Washington - Michael G. Foster School of Business ( email )

Paccar Hall 540, Box 353200
Seattle, WA 98195-3200
United States
206-616-8598 (Phone)
206-685-9392 (Fax)

Samantha C Seto

University of Washington, Michael G. Foster School of Business, Students ( email )

Box 353200
Seattle, WA 98195-3200
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
186
Abstract Views
998
rank
193,054
PlumX Metrics