Online disinformation: an economic analysis

Internet and social networks have hugely increased the quantity of information available to a decision-maker. Unfortunately, this huge quantity of information also includes fake news and false news. Therefore, a decision-maker needs to carefully select the reliable sources of information. This theoretical and empirical paper studies the effects of online disinformation from an economic perspective. Precisely, it introduces the role of disinformation in the choice of the optimal level of information. Disinformation can either increase the (monitoring) cost or reduce the benefit of information. In the presence of disinformation, therefore, information is below its optimal level. Furthermore, if disinformation is regarded as true, a problem of poor quality of information exists in the economy. However, education helps to recognise disinformation. An empirical analysis substantiates the main insights of the theoretical model.