Rumor Markets: State’s Information Control and People’s Beliefs in Political Rumors

Abstract

In contemporary China, despite heavy censorship, political rumors about corruption and scandals are rampant on the Internet and social media. Contrary to popular intuition, I argue political rumors are prevalent in China because they hold essential functions in maintaining authoritarian resilience: both the government and the people use rumors as an important channel in disseminating their political messages. To test my hypotheses, I conducted an online survey experiment in 2017 in China. I established four models of information exchange that analyze how the state’s information control and a lack of political trust create an underground market mechanism for unauthorized information, which stimulates people purchasing rumors as substitute goods. In black markets of unauthorized information, rumors fill the supply gap of official news that is usually censored by the state or be replaced by propaganda. In gray markets, the state’s information manipulation, such as using rumors to test and guide public opinion, encourages people to take rumors as more accessible and equally reliable sources of news. This research contributes to policy-making in combating political rumors and fake news. Since the inaccessibility and absence of credible information would lead to a proliferation of online rumors, a possible pathway for reducing online rumors is that the government needs to make a “supply-side” reform of official news rather than unilaterally to strike unauthorized information. This research has rich implications for our understanding of the limit of authoritarianism and contributes to existing theories on information flow and regime stability.