The Economics of “Fake News”

False information has economic, political, and social consequences. The authors analyze the real and perceived costs and benefits to those that engage in the creation and platform support of false information. Special consideration is given here to digital advertising ecosystems that provide a supportive environment for “fake news” creation. Fake news is one type of false information. The authors discuss the context of fake-news consumption, and suggest that fake-news creators, consumers, and various arbiters can reinforce each other and form a vicious circle. The article proposes mechanisms to break the circle and alter the cost-benefit structure of engaging in this activity.