The cost of lying
AbstractWe experimentally investigate the effect of cheap talk in a bargaining game with one-sided asymmetric information. A seller has private information about his or her skill and is provided an opportunity to communicate this information to a buyer through a written message. Four different treatments are compared; one without communication, one with free-form communication, and two treatments with pre-specified communication in the form of promises of varying strength. Our results suggest that lying about private information is costly and that the cost of lying increases with the size of the lie and the strength of the promise. Freely formulated messages lead to the fewest lies and the most efficient outcomes.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 666.
Length: 40 pages
Date of creation: 12 Jun 2007
Date of revision:
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Deception; Communication; Lies; Promises; Experiments;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-23 (All new papers)
- NEP-CBE-2007-06-23 (Cognitive & Behavioural Economics)
- NEP-EXP-2007-06-23 (Experimental Economics)
- NEP-LAW-2007-06-23 (Law & Economics)
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- Stefano Demichelis & Jörgen W. Weibull, 2007.
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