Economics Dictionary of Arguments

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Kranton I 421
Rumors/Sunstein/Bloch/Demange/Kranton: (Def) Rumors, in the dictionary definition, are opinions spread from person to person with uncertain veracity and possibly no discernible source (1). In a prominent book Cass Sunstein (2009)(2) documents the pervasiveness of rumors, their public benefits, and their perils. Rumors abound concerning the efficacy of vaccines, the birthplace of presidential candidates, the propriety of politicians, the fabrication of data in academic research, and the integrity of local and national elections.
Rumors/Agents: Agents’ individual payoffs depend on a collective decision, such as election of a candidate or authorizing the use of a new technology. Collective decision making is modeled as a stylized “vote” that reflects each agent’s expected utility from the decision. Some agents are unbiased and prefer that the decision correctly matches the true state of the world. Other agents are biased and prefer a particular decision regardless of the true state. (Such agents might personally benefit, say, from the decision.) Agents have prior beliefs as to the true state. One agent, selected at random, possibly receives precise information about the true state. This agent, whose identity is not known, can create a false or true message—a rumor—of the state of the world. Biased agents have the incentive to create a false message. Agents who receive a message make an inference as to the veracity of the message and decide whether or not to pass it along to influence how others will vote on the collective outcome. >Misinformation/Economic theories, >Network Models/Kranton, >Communication Models/Kranton, >Communication Filters/Kranton.


1. Webster’s English dictionary and Oxford English dictionary.
2. SUNSTEIN, CASS R., On Rumors: How Falsehoods Spread (New York: Farrar, Straus and Giroux, 2009).


Francis Bloch, Gabrielle Demange & Rachel Kranton, 2018. "Rumors And Social Networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 421-448.


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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Kranton I
Rachel E. Kranton
Francis Bloch
Gabrielle Demange,
Rumors And Social Networks 2018

Kranton II
Rachel E. Kranton
George A. Akerlof
Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being Princeton 2011


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