Social media, sentiment and public opinions: Evidence from #Brexit and #USElection Yuriy Gorodnichenko Tho Pham Oleksandr Talavera* University of California, Berkeley Swansea University Swansea University First draft: 17.01.2017 Current draft: 26.04.2018 Abstract: This paper studies information diffusion in social media and the role of bots in shaping public opinions. Using Twitter data on the 2016 E.U. Referendum (“Brexit”) and the 2016 U.S. Presidential Election, we find that diffusion of information on Twitter is largely complete within 1-2 hours. Stronger interactions across agents with similar beliefs are consistent with the “echo chambers” view of social media. Bots have a tangible effect on the tweeting activity of humans but the degree of bots’ influence depends on whether bots provide information consistent with humans’ priors. Overall, our results suggest that the aggressive use of Twitter bots, coupled with the fragmentation of social media and the role of sentiment, could contribute to the vote outcomes. JEL classification: D70; D72; L86 Keywords: Brexit; U.S. Election; Information diffusion; Echo chambers; Political Bots; Twitter * Corresponding author. School of Management, Swansea University, Bay Campus, Fabian Way, Swansea, SA1 8EN. E-mail:
[email protected]. The standard disclaimer applies. We are grateful to participants of the 2017 Royal Economics Society Conference, the 12th Annual Conference - Warsaw International Economic Meeting, and the 15th Annual Media Economics Workshop for comments. 1 1. Introduction The rise of Internet has changed the way people communicate and acquire information. Recent years have witnessed a decline in the traditional news media consumption (Stempel et al., 2000) while the number of online news users soars (Gottfried and Shearer, 2016; Bialik and Matsa, 2017).