Reducing Misinformation on Social Media: An Experimental Evaluation of Two Policy Interventions

Abstract

The prevalence of false and misleading news has become an issue of great concern in recent years. Academic researchers, policy makers, and social media firms all continue to seek effective solutions to reduce the sharing of misinformation. In this paper, we evaluate the effectiveness of two policies in particular: competition among media firms and fact-checking of published news articles by independent organizations. We first develop a theoretical model that predicts the effect of each policy and then conduct a behavioral experiment to test those predictions. Our experimental findings indicate that media competition is most effective at nipping misinformation in the bud because media firms spend significantly more resources on improving accuracy of their news when readers obtain news from multiple sources. We also find that fact-checking improves the overall quality of news available to viewers; however, it does not incentivize firms to improve the accuracy of their own news articles. Lastly, our results from an interaction treatment suggest that under competition, fact-checking adversely affects firms' investment in news accuracy.

Keywords: Misinformation, Experimental Economics, News Quality, Risk Aversion

JEL Classification: C7, C9, D81, D83