Misinformation and fake news have become widespread in the digital age, influencing public opinion, elections, and economic markets. While truthful journalism is a public good, it often competes with sensationalized, misleading, or false information that spreads faster and generates more revenue. This project challenges students to analyze why fake news exists from an economic perspective, exploring how market failures, profit incentives, and information asymmetry contribute to its prevalence.

Students will research how digital media platforms and news organizations generate revenue, focusing on advertising-based business models that prioritize clicks and engagement over factual accuracy. They should analyze why fake news stories often spread faster and farther than real news—not because they are true, but because they attract attention and generate higher ad revenue. Additionally, students should explore information asymmetry, where consumers struggle to distinguish between credible journalism and misinformation, leading to a breakdown in the market for reliable news.

A key part of this analysis will be investigating whether government intervention or media regulations can reduce misinformation, or if market-based solutions, such as fact-checking and consumer awareness, are more effective. Students should examine real-world examples of misinformation influencing economic and political events, such as stock market fluctuations caused by false reports, election interference, or the spread of health-related misinformation (e.g., during the COVID-19 pandemic).

The final research paper should summarize economic reasons behind the spread of fake news, discuss the role of profit incentives and market inefficiencies, and propose potential solutions. The goal is for students to understand how market failures extend beyond traditional goods and services and into the digital economy, shaping public discourse and decision-making.