Investors face a difficult challenge in determining whether news they read is true or fake and, according to psychology theory, an additional challenge of ceasing to rely on news subsequently revealed to be fake. To help address this latter challenge, we examine whether prompting investors to be in a deliberative mindset reduces their reliance on news after they learn that it is fake without affecting their reliance on news later revealed to be true. Consistent with theory, investors adjust their valuation assessments when news is later revealed to be fake, and this adjustment is magnified for investors in a deliberative mindset. Importantly, our results reveal that a deliberative mindset does not cause investors to discount news later revealed to be true.

Data Availability: Please contact the authors.

JEL Classifications: M41; G11; G4; C91; D83.

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