Can a Deliberative Mindset Prompt Reduce Investors’ Reliance on Fake News?

Abstract

We examine if prompting investors to be in a deliberative mindset reduces their reliance on financial news when the news 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 affect their judgments when the news is later revealed to be true. Our study contributes to research on fake news in the financial markets and has practical implications for investors when evaluating news that may be true or fake.

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

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