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Lying and Friendship

Author

Listed:
  • Sugato Chakravarty

    (Purdue University)

  • Yongjin Ma

    (Purdue University)

  • Sandra Maximiano

    (Purdue University)

Abstract

The goal of this paper is to investigate the interaction between social ties and deceptive behavior within an experimental setting. To do so, we implement a modified sender-receiver game in which a sender obtains a private signal regarding the value of a state variable and sends a message related to the value of this state variable to the receiver. The sender is allowed to be truthful or to lie about what he has seen. The innovation in our experimental design lies in the fact that, in contrast to the extant sender-receiver games, the receiver can take no action – which eliminates strategic deception. A further innovation lies in the fact that subjects (i.e., senders) are not restricted to choose between truth telling and a unique type of lie but, instead, are allowed to choose from a distinct set of allocations that embodies a multi-dimensional set of potential lies. Our experimental design is, therefore, able to overcome an existing identification problem by allowing us to disentangle lying aversion from social preferences. We implement two treatments: one in which players are anonymous to each other (strangers); and one in which players know each other from outside the experimental laboratory (friends). We find that individuals are less likely to lie to friends than to strangers; that they have different degrees of lying aversion and that they lie according to their social preferences. Pro-social individuals appear to be more lying averse. If they lie, however, they are equally likely to do so with friends and strangers. The deceptive behavior of selfish individuals mimics those of pro social types only when subjects play with friends. Overall, in addition to social preferences, friendship appears to be an important factor in improving our understanding of deceptive behavior.

Suggested Citation

  • Sugato Chakravarty & Yongjin Ma & Sandra Maximiano, 2011. "Lying and Friendship," Working Papers 1008, Purdue University, Department of Consumer Sciences, revised Mar 2011.
    • Handle: RePEc:csr:wpaper:1008
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    References listed on IDEAS

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    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
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    Cited by:

    1. M. Vittoria Levati & Aaron Nicholas & Birendra Rai, 2011. "Testing the Analytical Framework of Other-Regarding Preferences," Monash Economics Working Papers 26-11, Monash University, Department of Economics.
    2. Wang, Ruixin, 2015. "Essays on development economics and public economics," Other publications TiSEM e1779514-5b71-4726-925b-2, Tilburg University, School of Economics and Management.
    3. Christoph Feldhaus & Johannes Mans, 2014. "Who do you lie to? Social identity and the cost of lying," Working Paper Series in Economics 76, University of Cologne, Department of Economics.
    4. Wang, Ruixin, 2016. "Who Should I Share Risk with? Gifts can tell : Theory and Evidence from Rural China," Other publications TiSEM 95c6dbed-3f49-4d5a-987e-2, Tilburg University, School of Economics and Management.
    5. Cappelen, Alexander W. & Sørensen, Erik Ø. & Tungodden, Bertil, 2013. "When do we lie?," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 258-265.
    6. Grosch, Kerstin & Rau, Holger A., 2017. "Gender differences in honesty: The role of social value orientation," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 258-267.
    7. Xiao, Erte, 2017. "Justification and conformity," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 15-28.
    8. Levati, M. Vittoria & Nicholas, Aaron & Rai, Birendra, 2014. "Testing the single-peakedness of other-regarding preferences," European Economic Review, Elsevier, vol. 67(C), pages 197-209.
    9. Björn Frank, 2014. "Laboratory Evidence on Face-to-Face," International Regional Science Review, , vol. 37(4), pages 411-435, October.
    10. Wang, Ruixin, 2016. "Who Should I Share Risk with? Gifts can tell : Theory and Evidence from Rural China," Discussion Paper 2016-003, Tilburg University, Center for Economic Research.
    11. M. Vittoria Levati & Aaron Nicholas & Birendra Rai, 2011. "Testing the Framework of Other-Regarding Preferences," Jena Economics Research Papers 2011-041, Friedrich-Schiller-University Jena.

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    More about this item

    Keywords

    Lying; Friendship; social ties; deceptive behavior; signal; experiment;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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