The Political Economy of Media Bias

The Marie Skłodowska-Curie Action titled “Political Economy of Media Bias” (PEMB) studies how media bias can affect electoral outcomes and the welfare of citizens. A large majority of voters get political information from the media, which therefore constitute a critical component of modern democracies. A widespread source of concern is that the media may disseminate misinformation to affect political outcomes by shaping the beliefs of voters. This concern is supported by substantial empirical evidence showing that media bias has an impact on voters’ decisions at the ballot box. Yet, despite recent efforts to mitigate the “fake news phenomenon,” the spread of misinformation is still pervading the modern political landscape. Failures in addressing the issue of misinformation prompted criticisms of how such a problem is being addressed. This EU-funded PEMB project will use game-theoretical and experimental techniques to better understand the societal implications of media bias and to assess the effectiveness of current measures to regulate the media.

The problems addressed by this project are important for societies because the well-functioning of modern democracies crucially hinges on the information that voters receive. Therefore, it is key to ensure that such information is accurate and unbiased. Doing so would help voters in selecting better candidates for office and lead to the implementation of more efficient policies. Moreover, a better understanding of the fake news phenomenon would assist policymakers in designing an effective system of regulatory interventions.

The broad goal of the project is that of investigating the effects of information distortions. More specifically, the project has the following objectives: 1) to assess what are the implications of media bias on the welfare of voters; 2) study how misinformation affects policies; 3) provide a theoretical framework to study interventions that aim to increase the media’s costs of misreporting information; 4) to analyze how competition between media outlets impact on information transmission; 5) to provide empirical evidence of the impact of competition on the welfare. An additional objective of this MSCA Individual Fellowship is to promote the development of the individual researcher.

The work performed during the project was conducted via three main “work packages.” Each of these work packages (WPs) eventually resulted in a manuscript that is publicly available online. The first two work packages (WP1 and WP2) consist of two theoretical studies. There, the fellow was responsible for developing the theoretical framework, performing the mathematical analysis, and writing the manuscript. The fellow has presented the results obtained in these two work packages in ten different instances, including major international congresses, workshops, and conferences. Additional presentations for these two WPs are already scheduled. The fellow has worked also toward revising the manuscript of WP2 for publication in a leading peer-reviewed journal. The third work package (WP3) consists of an empirical investigation performed via an online controlled experiment. This work package sought to build skill with multiple research methodologies by mixing a theoretical framework with empirical analysis. The fellow has contributed to designing the experiment, writing the manuscript, organizing and conducting the experiment. Preliminary results of this WP were presented at the host institution, and more presentations are scheduled. An article on the research conducted in the Action was written and published in the online magazine UniTrentoMag. Additionally, the fellow has organized a workshop focused on the topic of the project, has provided leadership in applying for MSCA-IF grants at the host institution, and has promoted information about the project via social media and dedicated academic newsletters. Further dissemination and networking activities were performed by the fellow while spending a visiting period at Bocconi University.

The results of this MSCA are reported in (1) a theoretical paper on the political effects of media bias and fake-news laws; 2) a theoretical paper on the impact of competition between media outlets on the information received by voters; 3) an empirical paper on the impact of competition between media outlets on the welfare of all market participants. The papers resulting from the work performed in this Marie Skłodowska-Curie Action are publicly available online in dedicated repositories which, for the empirical part of the project, include the pre-registration and collected data. Moreover, information related to this project is also accessible in a dedicated online webpage built by the fellow.

This Marie Skłodowska-Curie Action pushes the frontiers of research in economics in several ways. The first two work packages provide a formal way to analyze previously unexplored theoretical models that allow us to study strategic communication in realistic settings. The first work package sheds new light on the effects of misinformation by showing that implications of media bias are not confined to distortions of voters' choices at the ballot box but spread and propagate back to the process of policy-making. Moreover, it provides novel insights on the effects of regulatory interventions such as the so-called “fake news laws.” Almost paradoxically, it shows that such interventions can produce more misinformation rather than less, and yet improve the welfare of citizens. The third work package validates a longstanding criticism of adversarial systems of communication by delivering empirical evidence that competition in information provision can be detrimental to the welfare of all market participants.

There are several impacts anticipated from this Action, among which (i) a potential influence on the design of measures directed toward minimizing the fake news problem; (ii) a contribution to the debate on the effectiveness of these regulatory interventions; (iii) the delivery of new techniques that can be applied to analyze a host of applications in economics and political science. As a result, the Action can contribute to the implementation of more effective and efficient policies, and to fostering new research on related topics. Finally, the action has impacted the fellow’s academic growth as a researcher.

Periodic Reporting for period 1 - PEMB (The Political Economy of Media Bias)

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