Holm, Håkan J. () (Department of Economics, Lund University)
Abstract
Beliefs in signals that reveal lies or truths are widespread. These signals may lead to a truth or lie detection bias if the probability that such a signal is perceived by the receiver is contingent on the truth value of the sender’s message. Such detection biases are analyzed theoretically in a bluffing game. The detection bias shrinks the equilibrium set to a unique non-pooling equilibrium, in which the better a player is at detecting lies the more often the opponent player will lie. With proper deception techniques such biases can in principle be used to extract hidden information.
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Publisher Info
Paper provided by Lund University, Department of Economics in its series Working Papers with number
2008:4.
Length: 18 pages Date of creation: 29 Feb 2008 Date of revision: Handle: RePEc:hhs:lunewp:2008_004
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
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