While regulatory interventions such as disclosures and “prebunking” can help reduce the influence of social media content promoting investment assets, they cannot completely eliminate that influence, according to an online study by the Ontario Securities Commission (OSC) on how to combat misinformation.
In the study involving 1,465 Canadian social media users, participants were exposed to social media posts resembling the type of content found on Reddit, X and YouTube promoting a particular asset during a ten-round online trading simulation.
They were then separated into seven test groups. A control group received no finfluencer material. Group one received finfluencer posts without interventions. Group two received posts with a disclosure. Group three received posts with a “prebunking” message aiming to debunk misleading information in advance. Group four received posts with “inoculation,” a technique that first exposes users to a weak version of a persuasive message. Group five received a risk warning prior to trading after reading the posts. Group six received a disclosure, inoculation and a risk warning.
Of the participants who were exposed to finfluencer posts, 38.1% bought a promoted asset, compared to 8.3% of the control group. A conflict-of-interest disclosure brought that number down to 28.5%, a prebunking alert reduced it to 21.3% and an inoculation that explains how misinformation works reduced it to 20.3%.
However, solely relying on a risk warning when a trade is made with no interventions on the finfluencer’s post did not change behaviour, with 36.3% of that group buying a promoted asset, the study found.
Combining disclosures with risks warnings and inoculation didn’t further reduce participants’ tendency to buy promoted assets either, with 21.7% doing so.
“None of these interventions fully mitigated the influence of social media posts,” the report said. “While our interventions were effective at reducing the persuasiveness of social media content, they do not eliminate the influence of social media messaging entirely.”
In addition, the survey found that Canadians who never invested were more likely to buy a promoted asset in every case. Overall, 29% of non-investors bought a promoted asset after being exposed to a promotional post, compared to 21% of investors.
“Non-investors are at an elevated risk of being influenced by finfluencer content on social media,” the OSC said in the report.