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Why Lying Pays: Truth Bias in the Communication with Conflicting Interests

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Author Info

  • Toshiji Kawagoe

    (Future University - Hakodate)

  • Hirokazu Takizawa

    (Research Institute of Economy, Trade & Industry)

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    Abstract

    We conduct experiments of a cheap-talk game with incomplete information in which one sender type has an incentive to misrepresent her type. Although that Sender type mostly lies in the experiments, the Receiver tends to believe the Sender's messages. This confirms ``truth bias'' reported in communication theory in a one-shot, anonymous environment without nonverbal cues. These results cannot be explained by existing refinement theories, while a bounded rationality model explains them under certain conditions. We claim that the theory for the evolution of language should address why truthful communication survives in the environment in which lying succeeds.

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    File URL: http://128.118.178.162/eps/exp/papers/0503/0503005.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Experimental with number 0503005.

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    Length: 41 pages
    Date of creation: 22 Mar 2005
    Date of revision:
    Handle: RePEc:wpa:wuwpex:0503005

    Note: Type of Document - pdf; pages: 41
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    Web page: http://128.118.178.162

    Related research

    Keywords: Cheap talk; Communication; Private information; Experiment; Equilibrium refinement; Bounded rationality; Truth bias;

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    References

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    1. Joseph Farrell., 1986. "Meaning and Credibility in Cheap-Talk Games," Economics Working Papers 8609, University of California at Berkeley.
    2. Rabin, Matthew & Sobel, Joel, 1996. "Deviations, Dynamics, and Equilibrium Refinements," Journal of Economic Theory, Elsevier, vol. 68(1), pages 1-25, January.
    3. COOPER, R. & DEJONG, D.V. & FORSYTHE, R. & Tom Ross, 1989. "Communication In Coordination Games," Carleton Industrial Organization Research Unit (CIORU) 89-07, Carleton University, Department of Economics.
    4. Blume, A. & DeJong, D.V. & Kim, Y-G. & Sprinkle, G., 1997. "Evolution of Communication With Partial Common Interest," Discussion Paper 1997-115, Tilburg University, Center for Economic Research.
    5. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
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    7. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    8. Steven A. Matthews & M. Okuno-Fujiwara & Andrew Postlewaite, 1990. "Refining Cheap-Talk Equilibria," Discussion Papers 892R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Vincent P. Crawford, 2003. "Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions," American Economic Review, American Economic Association, vol. 93(1), pages 133-149, March.
    10. Warneryd Karl, 1993. "Cheap Talk, Coordination, and Evolutionary Stability," Games and Economic Behavior, Elsevier, vol. 5(4), pages 532-546, October.
    11. Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
    12. Berg, Joyce E, et al, 1986. "Controlling Preferences for Lotteries on Units of Experimental Exchange," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 281-306, May.
    13. Cooper, Russell, et al, 1992. "Communication in Coordination Games," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 739-71, May.
    14. John W. Dickhaut & Kevin A. McCabe & Arijit Mukherji, 1995. "An experimental study of strategicinformation transmission," Economic Theory, Springer, vol. 6(3), pages 389-403.
    15. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
    16. Tetsuo Yamamori & Kazuhiko Kato & Toshiji Kawagoe & Akihiko Matsui, 2004. "Voice Matters in a Dictator Game," CIRJE F-Series CIRJE-F-302, CIRJE, Faculty of Economics, University of Tokyo.
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    Cited by:
    1. Holm, Håkan J. & Kawagoe, Toshiji, 2008. "Face-to-Face Lying – an experimental study in Sweden and Japan," Working Papers 2008:5, Lund University, Department of Economics.
    2. Kawagoe, Toshiji & Takizawa, Hirokazu, 2009. "Equilibrium refinement vs. level-k analysis: An experimental study of cheap-talk games with private information," Games and Economic Behavior, Elsevier, vol. 66(1), pages 238-255, May.

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