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Truth, trust, and sanctions: On institutional selection in sender-receiver games

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  • Ronald Peeters

    ()

  • Marc Vorsatz

    ()

  • Markus Walzl

    ()

Abstract

We conduct a laboratory experiment to investigate the impact of institutions and institutional choice on truth-telling and trust in sender-receiver games. We find that in an institution with sanctioning opportunities, receivers sanction predominantly after having trusted lies. Individuals who sanction are responsible for truth-telling beyond standard equilibrium predictions and are more likely to choose the sanctioning institution. Sanctioning and non-sanctioning institutions coexist if their choice is endogenous and the former shows a higher level of truth-telling but lower material payoffs. It is shown that our experimental findings are consistent with the equilibrium analysis of a logit agent quantal response equilibrium with two distinct groups of individuals: one consisting of subjects who perceive non-monetary lying costs as senders and non-monetary costs when being lied to as receivers and one consisting of payoff maximizers.

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Bibliographic Info

Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2011-28.

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Length: 53
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:inn:wpaper:2011-28

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Keywords: Experiment; Sender-receiver games; Strategic information transmission; Institutional selection;

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  1. Charness, Gary B & Rabin, Matthew, 2001. "Understanding Social Preferences With Simple Tests," University of California at Santa Barbara, Economics Working Paper Series qt0dc3k4m5, Department of Economics, UC Santa Barbara.
  2. Crawford, Vincent P., 2001. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt6k65014s, Department of Economics, UC San Diego.
  3. Alm, James & McClelland, Gary H & Schulze, William D, 1999. "Changing the Social Norm of Tax Compliance by Voting," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 52(2), pages 141-71.
  4. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, American Economic Association, vol. 90(1), pages 166-193, March.
  5. Cai, Hongbin & Wang, Joseph Tao-Yi, 2006. "Overcommunication in strategic information transmission games," Games and Economic Behavior, Elsevier, Elsevier, vol. 56(1), pages 7-36, July.
  6. Anabela Botelho & Glenn W. Harrison & Lígia Pinto & Elisabet E. Rutstrom, 2005. "Social norms and social choice," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 30, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
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Cited by:
  1. Raúl López-Pérez & Eli Spiegelman, 2013. "Why do people tell the truth? Experimental evidence for pure lie aversion," Experimental Economics, Springer, Springer, vol. 16(3), pages 233-247, September.
  2. Mehmet Gurdal & Ayca Ozdogan & Ismail Saglam, 2014. "Truth-telling and trust in sender–receiver games with intervention: an experimental study," Review of Economic Design, Springer, Springer, vol. 18(2), pages 83-103, June.
  3. Gurdal, Mehmet Y. & Ozdogan, Ayca & Saglam, Ismail, 2013. "Cheap talk with simultaneous versus sequential messages," MPRA Paper 45727, University Library of Munich, Germany.

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