Betting on Social Media | AIER

The term “social media” is something of a misnomer. I wouldn’t go so far as to call it dismisinfoganda, but the term does not capture the essence of the platforms it purports to encapsulate: Facebook, GETTR, Instagram, LinkedIn, Mastodon, Parler, Telegram, TikTok, Twitter, YouTube, and scores of others. Mutual interactive broadcast media (MIBM) is more apt, though perhaps less catchy, unless you pronounce the acronym “my be em” and know what “bm” stands for in medical jargon.

Many contradictory claims are made about the nature of social media/MIBM, some surely out of confusion and some surely out of a desire to control the platforms and the information shared on them. It has become fashionable to call MIBM platforms a “town square,” but a better analogy is a tavern with unusual “acoustics.” Let me explain.

Taverns are privately-owned physical spaces where people congregate to have fun in various ways, including expressing themselves, typically orally and visually. MIBM are privately-owned virtual spaces where people congregate to have fun in various ways, including expressing themselves, typically in writing and visually.

The unusual “acoustics” of MIBM stems from the fact that those who you hear/see diverge from those who can hear/see you, and do so on a voluntary basis. Generally, if you can hear/see someone in a tavern, they can hear/see you, and vice versa, like it or not. On MIBM, it is technically possible to hear/see/follow a group that is completely different from the group that follows you. It is also possible to turn most MIBM platforms into broadcasting devices only, by attracting followers/viewers but following no one else. For most users on most platforms, though, follower/following groups overlap considerably, but rarely completely. That means reposting others’ contributions, just like an individual might “pass the word” in a tavern from one group to another, can add value to conversations.

As in taverns, on MIBM platforms some people express themselves more often than others do. In both venues, some people limit themselves to chit-chat about sports and the weather while others make bombastic claims about this, that, or the other. While some people whisper to a close confidant in the corner, others stand up on the bar and shout over the din.

One big difference between taverns and MIBM platforms is who hears or sees individual chatter. In a tavern, people self-segregate to some extent by grabbing a corner, table, or room for themselves and their friends. But they are also exposed to random negative externalities, like being seated next to a bloviating big mouth. Sometimes people can avoid such annoyances by moving to another table, room, or tavern, but other times they are stuck listening to or seeing something that they would rather not. On MIBM, by contrast, people can end the externality by blocking the blowhard with a click or two. People on MIBM can also take the less extreme measure of ignoring posts, just as people in taverns may ignore claims they dislike, whether made or reposted by a friend or inadvertently overhead.

People in taverns can also escalate and “take it outside.” On MIBM, only words can be exchanged, so the old adage that “sticks and stones may break my bones but words can never hurt me” applies. Doxxing, or revealing the real name and address of an individual trying to remain pseudonymous, is reprehensible because it defeats that major advantage of MIBM by creating opportunities for physical violence. Doxxing is one of the few crimes that one could commit on MIBM, placing it in the same league as sharing child pornography, making specific threats or inciting others to violence, and fraud.

MIBM platforms certainly may ban users who engage in illegal behaviors, just as taverns employ bouncers to keep the peace. People may still sell illicit drugs or sex in the bathroom, though. The tavern keeper cannot be expected to police everything, especially claims made in conversations. The tavern keeper, perhaps by delegating authority to the bouncer, is best left to judge whether excluding a particular threat will help or hurt his or her business on net.

That said, keep in mind that most taverns are owned by sole proprietors or small partnerships with a direct interest in the bottom line. Most MIBM platforms, however, are publicly-traded joint-stock companies, which raises the possibility (some say probability) that their managers may act in their own interests rather than in the interests of the company’s stockholders. Solid evidence of just such a principal-agent problem recently occurred when Twitter downed a poison pill instead of accepting Elon Musk’s offer to buy the company at a substantial premium. Thankfully, fearful of being sued to death, the Twitter board soon relented.

Both taverns and MIBM face government regulations, though largely different ones. According to respected civil rights attorney Jenin Younes, “the federal government forces social media companies to censor Americans.” But why do the companies put up with it? Ironically, generally speaking, small businesses like taverns have more interest in contesting intrusive government regulations but fewer resources with which to do so. Big public corporations where the incentives of management are not well aligned with those of stockholders have sufficient resources, but insufficient will, to fight regulations. They tend to go with the flow, or to twist regulations to disadvantage competitors in the short run rather than to maximize long-term stockholder returns. Musk’s Twitter, by contrast, has both legal muscle and the incentive to flex it.

Like tavern patrons, most MIBM users just want to communicate and have fun. But, as in taverns, some go looking for controversy, something to complain about or somebody to doxx or block. Again, the tavern keeper/MIBM owner – not government regulators – should decide when the costs of an individual patron exceed his or her benefit to the business. That line is easier to discern in taverns because the patron’s benefit can be measured in dollars spent, not followers or engagement or page impressions. It is also easier to tell face-to-face if a patron is truly contrite or feigning compliance to get back to the bar.

One feature that I haven’t seen on MIBM platforms that could help reduce friction would be allowing users to check a box to indicate whether a given post is meant to be comedy, parody, satire, nonsense, factual/informational, political, opinion, or a policy claim. Users sometimes try to do that by adding clues like “imho” or a zany face emoji or THaT WEirD capitalization and so forth, but their intent is not always clear to other users.

Tagging posts could help to clarify the poster’s intent and also be employed by users to screen posts. Perhaps on one visit to my favorite MIBM platform, I just want to read satirical posts while during another visit I want “Just the facts ma’am.” Intent tags could be hidden unless the reader/listener wants to view the intent to ensure that the headline about all politicians being brain dead is actually satirical.

Intent tagging would also allow MIBM platforms to concentrate their “misinformation” efforts on people purporting to make factual, scientific, or policy-oriented claims. It is very disturbing to see parody sites like the Babylon Bee being banned, or clearly satirical articles being “fact checked.” Posts tagged political should be left alone as well because people have a HUMAN right to say “Let’s Go Brandon” or “Orange Man Bad” to their friends in a physical tavern, so they certainly have that right in the cavernous virtual taverns of MIBM.

All factual/policy/scientific claims should also be allowed, in the interest of suppressing bad ideas. If such claims are ritually banned or blocked, they simply spread in other ways, on other MIBM platforms and in taverns, around office water coolers, and on street corners. I have seen people on one MIBM platform assert that some outrageously false claim was true solely on the basis that it was stripped from another MIBM platform with a reputation for political bias. I’ve heard people assert that some shockingly crazy claim “must be true” because it wasn’t reported in the mainstream media! Such conclusions rest on a logical fallacy, of course, but they are typical human reactions that MIBMs truly interested in tamping down on misinformation need to recognize. The only way to suppress a bad idea is to expose its empirical and logical flaws and to mock it incessantly if need be. That does not always work quickly or entirely – as the cases of climate change, lockdowns, and socialism show – but it is far better to allow open discussion than to throw topics, like pedophilia, into subterranean shadows where they might fester and grow unnoticed.

Informational posts that merely point to peer-reviewed research ought to be left completely alone as well. Let the reputations of the author and the journal and the argument and evidence proffered stand or sink on their own merits. Ditto with posts that point to news articles, even if the journalism is subpar. I can see a case, though, for asking users who tag an unsourced post “informational” to reclassify it as “opinion,” or to point to a source, before posting.

Policy-related posts are probably the most problematic because they go beyond what “is” to “what ought to be.” But even here, posts are just words, not fisticuffs or knife play. They do not hurt, let alone kill, anyone. [See my satirical article on that point here.] What happened to the Great Barrington Declaration and its three authors was a travesty. 

To my knowledge, no extant MIBM platform is adequate to the demands of robust, empirically-based policy discussions. Twitter has pretensions but it was clearly lacking. Its blue checks and fact checks were both laughable. Maybe Musk can improve it, but, ultimately, nobody posting on any MIBM platform has sufficient skin in the game to say, and then defend, what they really believe. So most posts remain mere posturing, or empty virtue signaling, rather than substantive.

And that brings me back to taverns, where making side bets is a common way of getting the nearby blowhard to shut up, short of giving him a knuckle sammich. Oh, you really think your Mets are gonna beat my Phillies today? Twenty bucks (maybe thirty, due to inflation) says otherwise. The tavern keeper holds the money and pays the winner, if only to keep the peace.

So why not create a MIBM platform where users can ask posters to put up or shut up on factual claims, especially those linked to policy recommendations? 

Really think that inflation is “transitory?” Here’s a grand that says it will double before it dips below the present number. Take that bet or pull down your post voluntarily, ya shill. 

The Taliban will need at least six months to take over Afghanistan? Okay, buddy, how much are you willing to bet on that tripe? 

Some vaccine is effective against this or that? Pshaw! Here’s another grand that more than half of those vaccinated will catch the malady before the end of this calendar year. Not so sure anymore? Don’t want to commit? That’s fine, just as long as everyone else on the platform can see you lack the courage of your own convictions.

Obviously, wagers must be based on some objective outcome, preferably something quantitative and verifiable by third parties, as the famous Simon-Ehrlich wager was. The simple act of formulating wagers can aid discourse by forcing conversants to make precise predictions instead of blah, blah, blahing.

In short, MIBM platforms don’t need thought police or feckless fact checkers, they need to enable the types of nonviolent signals and claims markets long found in taverns. The recent easing of gambling laws in many states will help.

So that the rich don’t dominate by putting a million bucks on everything, let every user deposit, say, $100 to an account and be allowed to grow it by winning wagers. Individual wagers cannot exceed $100 but for “big” bets percentages of one’s deposit balance can be wagered instead. Account replenishment should not be allowed. Anyone’s account that hits zero, due to many wrong small bets or one big loss, gets kicked off the platform with the loss of all followers and @ handle or username. Users may return, but only by making a new $100 deposit and a new username that includes the number of times that they have been ousted from the platform for making too many wrong claims. 

MIBM platforms that are primarily interested in political power will not embed wagering but a new platform, or a newly purchased one, based on free speech and free market principles could rapidly gain popularity, plus the seigniorage from all those deposit accounts.

Robert E. Wright

Robert E. Wright

Robert E. Wright is a Senior Research Fellow at the American Institute for Economic Research.

He is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic ReviewBusiness History ReviewIndependent ReviewJournal of Private EnterpriseReview of Finance, and Southern Economic Review.

Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997.

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