Fake News: Susceptibility, Awareness and Solutions

Abstract

Employing a representative US online panel, we document the existence of large errors in people's beliefs about their ability to assess the accuracy of news headlines. With a randomized information experiment, we show that revelation of the true ability causally adjusts beliefs and reduces these errors. The effect is stronger for subjects who are overconfident about own ability and this is driven by gender differences in the reaction to the revealed ability. Finally, we show that the adjustment in beliefs causally increases the willingness to pay to hedge against the risk of being harmed by misinformation.