Electoral competition with fake news

Misinformation pervades political competition. We introduce opportunities for political candidates and their media supporters to spread fake news about the policy environment and perhaps about parties’ positions into a familiar model of electoral competition. In the baseline model with full information, the parties’ positions converge to those that maximize aggregate welfare. When parties can broadcast fake news to audiences that disproportionately include their partisans, policy divergence and suboptimal outcomes can result. We study a sequence of models that impose progressively tighter constraints on false reporting and characterize situations that lead to divergence and a polarized electorate.     

To what extent do network effects moderate the relationship between social media propagated news and investors’ perceptions?

As a prominent social media tool, Twitter enables prompt dissemination of financial news and information, which can have a substantial impact on investors’ perceptions and decision-making processes. The propagation of financial news and information through Twitter can either positively or negatively affect investors’ perceptions. As per network theory, the impact of information on one's perception and behavior is known as the network effect. Since Twitter is also a network, we tried to contribute more to this theory in this study by considering other factors that can have an impact on the perceptions of investors. We argue that the impact of financial information and news on investors’ perceptions is moderated by other factors such as connectivity, social ties, and network size of the network. To establish the links between them, we considered three key factors in investors’ networks: (1) network connectivity (network structure); (2) social ties circle (friends, family, colleagues); and (3) size of the network (number of contacts). The results of this study indicate that highly connected investors receive more information and hence, the impact of news is derived from the connectivity of investors within the network. The findings of the study also show that the social ties circle plays a crucial role in determining the impact of the news. The findings further indicate that the impact of news on investors’ perceptions also depends on the theme of the news.     

Mass media effects on trading activities: television broadcasting evidence from Japan

This study examines how information broadcasting through television (TV) media influences stock market activities. Consistent with the effect of TV information to attract investor attention, we find that increased information flow through TV is significantly associated with greater trading volume and larger price change. For information type, hard news from business-oriented programmes and earnings-related news strongly contributes to the attention effect, while the effect of soft news is weaker. Bid–ask spread widens for more TV information flows, suggesting that new information arrival in the market expands information asymmetry. Finally, the impact of TV is more influential for stocks with more individual shareholders than those with institutional shareholders.     

Morphogenesis Of Social Networks And Coexistence Of Technologies ∗

The aim of the article is to relate the formation of influence networks to the coexistence of technologies in the long run. In the spirit of Plouraboue et al. (1998), we postulate that potential adopters of a technology are situated in a social network. In our model, initial relations are partly negative and all the expected utilities are revised in parallel. In the case of an exogenous network, opinions can fluctuate endlessly. When agents reallocate their relationships, this reinforces trust in agents whose opinion is close to theirs. As a result of this process, the network stabilizes in the long run, generating diversity in expected utilities.     

Bayesian learning in social networks

We extend the standard model of social learning in two ways. First, we introduce a social network and assume that agents can only observe the actions of agents to whom they are connected by this network. Secondly, we allow agents to choose a different action at each date. If the network satisfies a connectedness assumption, the initial diversity resulting from diverse private information is eventually replaced by uniformity of actions, though not necessarily of beliefs, in finite time with probability one. We look at particular networks to illustrate the impact of network architecture on speed of convergence and the optimality of absorbing states. Convergence is remarkably rapid, so that asymptotic results are a good approximation even in the medium run.     

An experimental study of persuasion bias and social influence in networks

In many areas of social life, individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network, then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment, four agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with three different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than under optimal updating. Our results are consistent with the model of “persuasion bias” of DeMarzo et al. (2013. Q. J. Econ., 909) and at odds with an alternative heuristic according to which the most influential agents are those with more incoming links.     

Does Twitter chatter matter? Online reviews and box office revenues

ABSTRACT

With a rapid rise of text-based social media and online Word-of-Mouth (WOM) activity, millions of people express their thoughts and opinions on a variety of topics. Considering that nowadays WOM is a most influential source of information when guiding consumers’ choice and purchase decisions, in this paper we look at the relationship between Twitter messages (tweets) and cinema box office revenues. Using static and dynamic panel data regression approaches, we show that the frequency, sentiment and timing of tweets posted about a film are correlated to different extent with the movie’s box office revenues, with negative tweets being particularly damaging to the box office revenues. From a managerial perspective, this is important to know, such that film production companies and distributors can adjust their strategy accordingly.     

News sentiment and overshooting of exchange rates

In a globalized world, the volume of international trade is based on both import and export prices, thereby making a country’s economy highly dependent on exchange rates. In order to study exchange rate movements, one frequently exploits the so-called Dornbusch overshooting model. However, the model is controversial from a theoretical point of view: it explains exchange rate movements by a number of fundamental variables but ignores how novel information in the form of news can enter the market. As a remedy, this article adjusts for information dissemination by performing a multivariate analysis to compare the classical overshooting model with an extended variant that includes news sentiment. Our results show that news sentiment has a substantial explanatory power of 11% of the exchange rate forecasting error variance. In addition, we also find statistical evidence that a shock in news sentiment may lead to overshooting.     

Social capital, inclusive networks, and economic performance

Empirical studies show that the relationship between social capital and economic performance is ambiguous. The paper points to the potential trade-off between the sustainability of self-enforcement and the magnitude of gains from trade in social networks as an explanation. Based on an infinitely repeated multi-player prisoners’ dilemma it is shown how self-enforcement of cooperation within a network is influenced by its inclusiveness, its communication capacity, and the complexity of the exchange setting. The paper shows that inclusive social capital can combine both low enforcement costs and high gains from trade even in a complex exchange setting.     

Exploring the interaction between stock price index and exchange rates: an asymmetric threshold approach

This article examines the impact of stock market news on the foreign exchange markets of USA, Canada and UK, employing an innovative extension of the asymmetric threshold model of Apergis and Miller (2006). Under this framework we can disentangle the reaction of foreign exchange market to bad or good news and small or large news of stock returns. Our comprehensive daily data-set spans the period from January 1990 to June 2014. Using a cointegration and error correction model, we document the existence of a causal relationship between stock market and foreign exchange markets. Most interestingly, our results derived from the asymmetric threshold model confirm that the relationship between stock and foreign exchange markets is sensitive to short-term good or bad news and short-term small or large news. Our findings entail significant implications for policymakers, governments, risk managers and international investors.     

Social cooperatives,social welfare associations and social networks

We use an original data-set to study how participation in two types of non-profit organizations – i.e. social welfare associations and social cooperatives – affects individual social capital, understood as a network of cooperative relationships. Participation in both the types of organization allows members to start new social relations. However, social welfare associations seem to play a significantly greater role in the development of volunteers’ social capital, favouring the creation of weak ties that are used to exchange information and advice, and offering the opportunity to establish stronger ties entailing concrete mutual support. Within social cooperatives, workers appear to develop their individual social capital to a greater extent than volunteers. Our results suggest that the composition of the workforce, the depth of members’ involvement in the organization’s activities and the human resources strategies adopted by the management influence the creation of cooperative relations through on-the-job interactions.     

Exchange rate market efficiency and new information

This paper uses a multi-currency approach to analyze the relationship between forward exchange rates, future spot rates and new information. The empirical results tend to support the hypothesis that the exchange rate can be expressed as a function of factors known in advance and ‘news’.     

Group identification with (incomplete) preferences

We consider the problem of identifying members of a group based on individual opinions. Since agents do not have preferences in the model, properties of rules that concern preferences (e.g., strategy‐proofness and efficiency) have not been studied in the literature. We fill this gap by working with a class of incomplete preferences derived directly from opinions. Our main result characterizes a new family of group identification rules, called voting‐by‐equitable‐committees rules, using two well‐known properties: strategy‐proofness and equal treatment of equals. Our family contains as a special case the consent rules (Samet & Schmeidler. J. Econ. Theory, 110 (2003), pp. 213–233), which are symmetric and embody various degrees of liberalism and democracy; and it also includes dictatorial and oligarchic rules that value agents’ opinions differently. In the presence of strategy‐proofness, efficiency turns out to be equivalent to non‐degeneracy (i.e., any agent may potentially be included or excluded from the group). This implies that a rule satisfies strategy‐proofness, efficiency, and equal treatment of equals if, and only if, it is a non‐degenerate voting‐by‐equitable‐committees rule.     

A simple model of homophily in social networks

Biases in meeting opportunities have been recently shown to play a key role for the emergence of homophily in social networks (see Currarini et al., 2009). The aim of this paper is to provide a simple microfoundation of these biases in a model where the size and type-composition of the meeting pools are shaped by agents׳ socialization decisions. In particular, agents either inbreed (direct search only to similar types) or outbreed (direct search to population at large). When outbreeding is costly, this is shown to induce stark equilibrium behavior of a threshold type: agents “inbreed” (i.e. mostly meet their own type) if, and only if, their group is above certain size. We show that this threshold equilibrium generates patterns of in-group and cross-group ties that are consistent with empirical evidence of homophily in two paradigmatic instances: high school friendships and interethnic marriages.     

Information content of lock-up provisions in initial public offerings

An overwhelmingly large proportion of initial public offerings (IPOs) report lock-up provisions that prohibit existing stockholders from selling their shares within a specified period after the offering date. These lock-up periods may last as long as 3 years. Because influential buyers request the lock-up, we conjecture that the length conveys credible information pertinent to the risk of the IPO. Analyzing 729 IPOs from January 1990 to December 1992, we found that the lock-up period signals the issuer's riskiness and that a 180-day lock-up period seems to be the norm. Any departure from the norm suggests more uncertainty about a firm's value and thus results in deeper IPO underpricing as well as a larger underwriter spread. We also found that thin-trading activity occurring shortly after the expiration of the lock-up period is perceived by the market as good news, while heavy trading is regarded as bad news.     

RUMORS AND SOCIAL NETWORKS

This article studies the transmission of rumors in social networks. We consider a model with biased and unbiased agents. Biased agents want to enforce a specific decision and unbiased agents to match the true state. One agent learns the true state and sends a message to her neighbors, who decide whether or not to transmit it further. We characterize the perfect Bayesian equilibria of the game, show that the social network can act as a filter, and that biased agents may have an incentive to limit their number.     

创新生态系统价值共创：概念内涵、行为模式与动力机制

创新生态系统价值共创已成为学界、政界、业界共同关注的议题。基于复杂适应系统理论和社会交换理论，对创新生态系统价值共创的概念内涵、行为模式及动力机制进行系统性研究。结果发现，创新生态系统价值共创是价值创造核心主体、价值创造服务主体和价值创造推动主体等具有共生关系的价值创造共同体在某一主体协调下，围绕共同价值主张，为实现主体间互惠共赢而形成的复杂适应行为；构建创新生态系统“交换—关系”价值共创行为模式分析框架，挖掘“契约型”“关系型”“经济互惠型”和“社会协商型”4类价值共创行为模式；指出“开发—保护—释放—重组”的适应性循环和“互惠、协商、公平、信任”的交换规则是创新生态系统实现可持续价值共创的动力机制及重要保障。最后，提出未来研究展望。     

Diffusion in complex social networks

This paper studies how a behavior spreads in a population. We consider a network of interacting agents whose actions are determined by the actions of their neighbors, according to a simple diffusion rule. We find, using a mean-field approach, the threshold for the spreading rate above which the behavior spreads and becomes persistent in the population. This threshold crucially depends on the connectivity distribution of the social network and on specific features of the diffusion rule.     

Trust in triads: effects of exit, control, and learning

This paper provides theoretical background for some effects of social networks on trust. We study the implications of a model with rational actors in two settings with three actors. In the first setting, there are two trustees who are involved in transactions with one truster implying that the truster has an exit option. In the second setting, two trusters play with one trustee, which gives the trusters options for voice, i.e., complaining and informing each other about the trustee's behavior. We compare these models with a baseline model in which there is only one truster and one trustee. It turns out that the opportunities for placing and honoring trust do not change for the exit model compared to the baseline model. The opportunities for trust in the voice model differ from the baseline model only if both trusters inform each other at a rate that is high enough. Only if the possibilities for receiving information and transmitting information are large enough for both trusters, trust will increase due to the information exchange possibilities in the voice model.     

Is the Fed’s news perception different from the private sector’s?

The recent literature on monetary policy has dedicated considerable attention to modelling agents’ processing of information about the future in real time. This paper contributes to this growing strand by investigating the implied differences in the so-called news shocks estimated from the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model using the real-time data sets from the Survey of Professional Forecasters (SPF) and the Federal Reserve’s Greenbook (GB) forecasts. Alternative specifications with either the SPF or GB forecasts aim to delineate the differences in the private sector’s and the Fed’s expectations of future macroeconomic outcomes and identify the differences in their perception of news shocks. Our results indicate that while the demand news shocks have very similar distributions in the two datasets, the monetary and cost-push news shocks from the models estimated on the GB data tend to be larger than those from the SPF. These findings suggest that the Federal Reserve’s forecasting methods allow for more variation in future outcomes than the SPF’s. These findings mesh well with the extant literature on the superiority of the Fed’s forecasts relative to the private sector’s and provide a structural explanation for the source of this superiority.