Martin Richardson, Frank Stähler

Some Economics of Echo Chambers

Volume 177 () / Issue 2, pp. 205-219 (15)
Published 22.02.2021

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This paper analyzes competition between a media firm providing true information (news) and two fake-news providers that create echo chambers. Information from the media firm is uncertain but truthful, and consumers enjoy confirmation of their prior beliefs due to cognitive dissonances. We show that, even if real news is more valued than fake news, entry by fake-news providers becomes more profitable with increased variance of information. Furthermore, a public news provider makes entry for fake-news providers harder than for a profit-maximizing media firm.

Martin Richardson No current data available.

Frank Stähler Geboren 1962; Studium der Volkswirtschaftslehre in Marburg und Münster, 1991 Promotion; 1992–98 wiss. Mitarbeiter am Institut für Weltwirtschaft in Kiel; 1997 Habilitation; seit 1998 Akademischer Rat an der Universität Kiel.