'Cure or Poison?' Identity Verification and the Spread of Fake News on Social Media

Fake news is increasingly prevalent on social media, and the anonymity of the Internet is a major enabler. Social media platforms seek to reduce online anonymity with identity verification by verifying user identities with email addresses, phone numbers, or government-issued photo identification. However, we ask: Is identity verification effective in deterring fake news? Using a unique dataset (spanning from 2009 to 2016) from a large-scale social media platform, we empirically investigate the impact of identity verification on the creation and sharing of fake news. In doing so, we exploit an exogenous policy change in identity verification on the social media platform as a natural experiment. Notably, our results show that identity verification may actually not deter fake news. We find that in contrast to verification with a regular badge (a badge that isdesigned to signal a verified status), verification with an enhanced badge (a badge that is designed to signal a superior verified status and allegedly endow higher credibility) may even fuel the proliferation of fake news. An enhanced badge for verification proliferates fake news, not only by encouraging verified users to create more fake news, but also by misleading other users into sharing fake news created by verified users. This study contributes to the literature on online anonymity and work on information diffusion on social media, while it informs leaders in social media that a costless-to-cheat identity verification system can have unintended negative effects, and that a misleading design of verification badges may amplify the influence of fake news created by verified users and incentivize more effort elicited from the strategic fake-news creators