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Truth and Trust in Communication: An Experimental Study of Behavior under Asymmetric Information

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Author Info
Rode, Julian () (Universitat Pompeu Fabra)
Abstract

The paper presents an experimental study of truth telling and trust in communication under asymmetric information. In a two-player Communication Game (cf., Gneezy, 2005), an informed “advisor” sends a message to an uninformed “decision maker”, who then has to decide whether to follow the advice. The advisor may gain more by lying in the message. In two treatments, either a cooperative or a competitive context is induced before participants play the Communication Game. Advisors are unaffected by this contextual variation. In contrast, decision makers in the competitive context trust the advice less than in the cooperative context. The data provide evidence that this change in trust is due to different perceptions of the incentive structure. Individual differences in behavior can be related to certain personal characteristics (field of studies, gender, personality test scores). The data are largely in line with Subjective Equilibrium Analysis (Kalai & Lehrer, 1995).

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Publisher Info
Paper provided by The Ratio Institute in its series Ratio Working Papers with number 111.

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Length: 45 pages
Date of creation: 10 Apr 2007
Date of revision:
Handle: RePEc:hhs:ratioi:0111

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Related research
Keywords: experimental economics truth telling trust asymmetric information individual differences context effects subjective beliefs

Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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    Other versions:
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    Other versions:
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    Other versions:
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