Recent advances in artificial intelligence have led to new forms of misinformation, including highly realistic “deepfake” synthetic media. We conduct three experiments to investigate how and why retail investors react to deepfake financial news. Results from the first two experiments provide evidence that investors use a “realism heuristic,” responding more intensely to audio and video deepfakes as their perceptual realism increases. In the third experiment, we introduce an intervention to prompt analytical thinking, varying whether participants make analytical judgments about credibility or intuitive investment judgments. When making intuitive investment judgments, investors are strongly influenced by both more and less realistic deepfakes. When making analytical credibility judgments, investors are able to discern the non-credibility of less realistic deepfakes but struggle with more realistic deepfakes. Thus, while analytical thinking can reduce the impact of less realistic deepfakes, highly realistic deepfakes are able to overcome this analytical scrutiny. Our results suggest that deepfake financial news poses novel threats to investors.

Visual working memory (VWM) allows us to maintain a small amount of task-relevant information in mind so that we can use them to guide our behavior. Although past studies have successfully characterized its capacity limit and representational quality during maintenance, the consequence of its usage for task-relevant behaviors has been largely unknown. In this talk, I will demonstrate that VWM representations get distorted when they are used for perceptual comparisons with new visual inputs, especially when the inputs are subjectively similar to the VWM representations. Furthermore, I will show that this similarity-induced memory bias (SIMB) occurs for both simple (e.g. , color, shape) and complex stimuli (e.g., real world objects, faces) that are perceptually encoded and retrieved from long-term memory. Given the observed versatility of the SIMB, its implication for other memory distortion phenomena (e.g., distractor-induced distortion, misinformation effect) will be discussed.