Proposal: A Market for Truth to Address False Ads on Social Media

3 Pages Posted: 16 Apr 2020 Last revised: 22 Jun 2020

See all articles by Marshall W. Van Alstyne

Marshall W. Van Alstyne

Boston University – Questrom School of Business; Massachusetts Institute of Technology (MIT) - Sloan School

Date Written: March 28, 2020

Abstract

At one extreme, Twitter rejects all political ads no matter how important the message. At the other extreme, Facebook accepts all political ads no matter how untruthful the message. As lies in political advertising become increasingly problematic, neither policy works. The former prevents us from hearing newcomers while the latter pollutes our discourse with misinformation.

This short article proposes a "market for truth" that would allow social media platforms to take political ads, guarantee the ads are lie free, and at the same time absolve such platforms of responsibility for deciding what's true. Using mechanism design, it causes advertisers to either internalize their negative externalities or to signal that they are untrustworthy. It also provides a business model that should make fact-checking scalable and profitable.

This short précis is a segment of a longer treatise on the problem of fake news.

Keywords: Fake News, False Advertising, Externalities, Signaling, Information Asymmetry

JEL Classification: D02, D23, D52, D62, D63, D72, D82, D83, H23, L38, L51, M37, M38

Suggested Citation

Van Alstyne, Marshall W., Proposal: A Market for Truth to Address False Ads on Social Media (March 28, 2020). Forthcoming in Communications of the ACM, Boston University Questrom School of Business Research Paper No. 2020-03, MIT Sloan Research Paper No. 2020-03, Available at SSRN: https://ssrn.com/abstract=3563256 or http://dx.doi.org/10.2139/ssrn.3563256

Marshall W. Van Alstyne (Contact Author)

Boston University – Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States
617-358-3571 (Phone)

HOME PAGE: http://questromapps.bu.edu/mgmt_new/Profiles/VanAlstyneMarshall.html

Massachusetts Institute of Technology (MIT) - Sloan School ( email )

Initiative on the Digital Economy
245 First St, Room E94-1521
Cambridge, MA 02142
United States
617-253-0768 (Phone)

HOME PAGE: http://web.mit.edu/marshall/www/home.html

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