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Externalities, stakes, and lying

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  • Gneezy, Uri
  • Kajackaite, Agne

Abstract

We study an observed cheating game in which senders can earn money by lying to the experimenter, knowing the experimenter will later be able to observe whether they told the truth or lied. We modify the game by matching each sender with a receiver, whose earnings negatively correlate with the earnings of the sender. Our results show that senders lie less when matched with a receiver who loses money if they lie. However, once we increase the stakes by a factor of five, participants lie as much in the two-player game as in the one-player game. That is, an externality reduces lying but only as long as the stakes are low.

Suggested Citation

  • Gneezy, Uri & Kajackaite, Agne, 2020. "Externalities, stakes, and lying," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 629-643.
    • Handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:629-643
    DOI: 10.1016/j.jebo.2020.08.020
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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    2. Matthias Sutter, 2009. "Deception Through Telling the Truth?! Experimental Evidence From Individuals and Teams," Economic Journal, Royal Economic Society, vol. 119(534), pages 47-60, January.
    3. Johannes Abeler & Daniele Nosenzo & Collin Raymond, 2019. "Preferences for Truth‐Telling," Econometrica, Econometric Society, vol. 87(4), pages 1115-1153, July.
    4. Urs Fischbacher & Franziska Föllmi-Heusi, 2013. "Lies In Disguise—An Experimental Study On Cheating," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 525-547, June.
    5. Barron, Kai & Stüber, Robert & van Veldhuizen, Roel, 2019. "Motivated motive selection in the lying-dictator game," Discussion Papers, Research Unit: Economics of Change SP II 2019-303, WZB Berlin Social Science Center.
    6. Kajackaite, Agne & Gneezy, Uri, 2017. "Incentives and cheating," Games and Economic Behavior, Elsevier, vol. 102(C), pages 433-444.
    7. Uri Gneezy & Agne Kajackaite & Joel Sobel, 2018. "Lying Aversion and the Size of the Lie," American Economic Review, American Economic Association, vol. 108(2), pages 419-453, February.
    8. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
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    Citations

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    Cited by:

    1. Caliari, Daniele & Soraperra, Ivan, 2023. "Planning to cheat: Temptation and self-control," Discussion Papers, Research Unit: Market Behavior SP II 2023-205, WZB Berlin Social Science Center.
    2. Ruan, Qinnan, 2022. "Management control systems and ethical decision making," Other publications TiSEM 3b6dc74f-fd2a-48ef-b1a9-c, Tilburg University, School of Economics and Management.
    3. Angelova, Vera & Tolksdorf, Michel, 2022. "Lying to Individuals versus Lying to Groups," Rationality and Competition Discussion Paper Series 350, CRC TRR 190 Rationality and Competition.

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    More about this item

    Keywords

    Lying; Cheating; Stakes; Fairness; Laboratory experiment;
    All these keywords.

    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
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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