This paper examines strategic communication on social media, focusing on how senders (e.g., companies) react to external events by sending values-based messaging to connect with consumers or stakeholders. These messages aim to demonstrate alignment with a prosocial cause and bolster the sender’s brand image. An external investigator can aid the receivers of the sender’s message by providing a partially informative assessment of the sender’s true commitment to the prosocial cause. Receivers then decide whether to support these messages based on two primary motivations: their own desire to signal support for valued causes and their preference for genuinely committed senders. Employing a Bayesian Persuasion framework, we find that the informativeness of the investigator’s signal creates strategic opportunities for senders, sometimes leading to misrepresentation—the delivery of prosocial messages without genuine underlying commitment. Surprisingly, this misrepresentation occurs because the investigator’s signal could reveal a lack of commitment, not in spite of it. We also show that more frequent misrepresentation does not necessarily translate to higher profits for the sender. Finally, the paper explores the influence of confirmation bias on receivers’ perceptions.

This paper studies the impact of content moderation through a theoretical model that accounts for both vertical toxicity (explicit harmful content) and horizontal toxicity (identity-alignment-induced negative engagement) on social media. In the model, users play a dual role in social media platforms—creating content for others to engage with, while simultaneously consuming and interacting with content produced by others. Our analysis uncovers mixed outcomes of moderation policies in terms of content creation and user engagement. When the majority of users are toxic who prioritize identity alignment, moderation unintentionally discourages content creation by non-toxic users. This occurs because moderation elevates the visibility of non-toxic content, which in turn increases negative engagement directed at it. Consequently, content moderation can either enhance or diminish overall engagement, depending on the proportion of toxic users and the intensity of moderation. In fact, moderation does not necessarily harm engagement when a platform hosts a small proportion of toxic users as long as it maintains a sufficiently high level of moderation intensity. Surprisingly, the lack of moderation efforts could sometimes result in lower engagement. We also explore how platform design and technology interact with moderation policies to influence content creation and engagement outcomes.

While smartphones have surpassed PCs (laptops or desktops) to become the dominant device for news consumption, little is known about whether the device a consumer uses to access online information affects their ability to discern misinformation from true information. Analysis of a large Twitter dataset (N = 103,567) and four experiments (N = 1,617) find that people who access information on smartphones are less discerning—they are more likely to believe and share misinformation but not true information—than people who access information on PCs. We identify two mechanisms. First, smartphones enable consumers to access information almost anywhere, including in distracting environments, and distractions increase the difficulty of detecting misinformation. Second, holding the environment constant, certain characteristics of smartphones, such as smaller screens and association with leisure activities, make people less deliberative and thus less discerning. Theoretically, this research enriches the misinformation literature and the smartphone literature and makes a unique contribution to both. Practically, it highlights the need to alert users, especially smartphone users and users in distracting environments, to misinformation.

This paper studies the role of market structure in regulatory compliance through a unique empirical example: censorship via content removal by three major live-streaming platforms in China. Based on 30 unexpected sensitive events, I first present reduced-form evidence that the largest platform censored a higher number of keywords and complied faster on average than the smaller platforms. I then develop and estimate a structural model where platforms compete for users by choosing whether to comply with the government’s censorship requests. By complying immediately, platforms may lose users who prefer to evade censorship by switching out. By delaying compliance, platforms incur a political cost, but it also allows them to attract new users from their competitors who quickly comply with the government’s censorship requests. My counterfactual analysis predicts that if the less compliant small platform were shutdown, both the remaining two platforms would comply less often in equilibrium due to stronger strategic incentives. This suggests that decentralizing online market power could help an authoritarian government control social media: tolerating a bit of dissent on small platforms allows big platforms to censor more effectively as it mitigates their strategic incentives.

This paper explores the impact of using artificial intelligence (AI) to connect marketers with social media influencers. We develop a theoretical model to examine how AI accuracy affects the competition between influencers and the profitability of a social media platform. Our findings show that improving AI accuracy may not always benefit the platform, especially for platforms with intermediate follower density. Two opposing effects of AI improvement affect the prices of influencer marketing campaigns: AI enhances the matching between influencers and marketers, but also intensifies competition between different types of influencers. The overall effect on prices can be negative for some influencers due to the asymmetric nature of such matching technology: the matching outcome for influencers with a narrower audience (“niche” influencers) is more sensitive to AI accuracy than that for those with a broader audience (“general” influencers). As a result, more niche influencers begin to participate in marketing campaigns when AI accuracy improves, which reduces the prices offered by sufficiently general influencers and may lead to a decline in platform revenue. Additionally, we found that adjusting commission rates in response to AI improvements could help mitigate the negative impact, although it may not eliminate it entirely. Our findings offer valuable insights for social media platforms seeking to remain competitive in the influencer marketing landscape.

We show theoretically that when high-quality, low-price counterfeits exist and are visibly indistinguishable from authentic products, the status-seeking wealthy may embrace “less is more,” or what we refer to as the minimalist luxury strategy, to signal their status. These are the wealthy who have a high disutility of shopping for counterfeits. Specifically, in our model, only buyers know the authenticity of their own purchases. Because of this information asymmetry, these wealthy may purposefully restrain from consumption of luxury goods as a sacrifice of functional utility to stand out, a signaling strategy that the rest are not willing to mimic. Here, “less” functional utility allows those status-seeking wealthy to enjoy “more” symbolic utility that the society bestows on their perceived status. This minimalist luxury strategy is in sharp contrast to Veblen’s conspicuous consumption strategy, as well as to the maximalist luxury strategy proposed by Liu et al. (2022). We derive this minimalist luxury equilibrium, discuss how signaling in our context can differ from that à la Veblen, and explore its managerial implications for the luxury goods industry.

The availability of high-quality, low-price counterfeits in many luxury markets threatens the role of luxury goods as a status symbol. If those counterfeits look and feel the same as the authentic counterparts, as many professional authenticators observe, and they are available at a fraction of the price of authentic goods, why would self-interested consumers purchase authentic luxury goods? Then, the future of luxury goods is called into question. In this paper, we propose that the presence of high-quality, low-price counterfeits can, surprisingly, motivate the wealthy consumers to pursue what we term as the maximalist luxury strategy. In the presence of these counterfeits, the wealthy can resort to signaling their status by purchasing the maximum number of luxury goods available and put their copious consumption on display, while in the absence of such counterfeits, the wealthy consumers only need to purchase the minimum number of luxury goods to stand out. This new signaling mechanism then highlights the importance of product line decisions by a luxury brand in combating counterfeits and provides a number of managerial insights about how to maintain the role of luxury goods as a status symbol through pricing, adjusting the product line, and limiting its products’ functionality.