Abstract
The volume of fake news in the digital media landscape is increasing, creating a new threat to organizations’ reputations. At the same time, individuals are more aware of the existence of fake news. It thus remains unclear how fake news affects evaluators’ reputation judgments. In this paper, we draw on the distinction between first-order judgments (i.e., an individual evaluator’s reputation judgment) and second-order judgments (i.e., an individual evaluator’s belief about the reputation judgments of other evaluators). We integrate this distinction with insights from communication research and social psychology to theorize how fake news affects reputation judgments and behavioral intentions. Through three experimental studies, we show that the negative effect of fake news is larger for second-order reputation judgments and that this effect is greater for organizations with a positive reputation. Furthermore, our results indicate that although fake news has a smaller effect on first-order judgments, the latter adapt to second-order judgments and thereby affect behavioral intentions. This paper contributes, first, to the micro-cognitive perspective on reputation formation by taking the first step in developing a comprehensive understanding of the intricate impact of fake news on reputation and behavioral intentions. Second, this paper contributes to our understanding of the role of a good prior reputation as a buffer or a burden.