Rachel Kranton (Duke), "Social Connectedness and the Market for Information"
鈥淪ocial Connectedness and the Market for Information鈥�
(Duke)
September 16, 2022, 3:30 to 5:00 PM
Leacock 429
Host: Leonie Baumann
Field: Theory
Abstract:
This paper introduces a simple model of contemporary information markets: Consumers prefer high-quality information, judiciously sharing stories and posts. High-quality stories are costly to produce, and overall quality is endogenous. When producers鈥� payoffs derive from how many consumers see their stories, quality is highest when social connectedness is neither too high nor too low. In highly-connected markets, low-quality stories are widely seen and dominate. Third-party misinformation can increase high-quality output, since consumers share more judiciously. When producers鈥� payoffs depend on consumer actions (e.g, votes or purchases) and consumers are highly connected, consumers perfectly infer quality and misinformation has no impact.