Cash, Credibility, and Conversion: The Influence of Synthetic Media on Investment Behavior

Abstract: Prior to November of 2022, the topic of synthetic media was largely buried within academic journals, constrained to conversations about national security, and often fundamentally misunderstood. The release of ChatGPT, however, has accelerated discourse on the societal impacts of synthetic media. This study first highlights several gaps within existing literature on synthetic media, structuring the impact potential and limitations of synthetic media threats within a theoretical framework. Second, it identifies financial information environments as prime candidates for future disruption via synthetic text modalities, proposing an experimental survey for measuring the influential power of synthetic financial text on global investment communities. Rather than merely assessing the ability of survey participants to distinguish genuine from synthetic text, the experiment contained within this study measures synthetic media influence by observing its ability to manipulate belief via a series of behavioral variables. The results indicate that synthetic text can significantly shift investor sentiment away from what it might otherwise have been under truthful information conditions. Furthermore, synthetic financial text demonstrated a unique ability to "convert" investors, inspiring extreme changes in outlook about a company compared to genuine financial texts. This trend should inspire concern within the global financial community, particularly given the historical vulnerability of equity markets to investor sentiment shocks.