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In vino veritas? Communication under the influence—An experimental study

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  • Au, Pak Hung
  • Lim, Wooyoung
  • Zhang, Jipeng

Abstract

We report results from controlled laboratory experiments designed to investigate the effects of drinking alcohol on communication and transactions. In a game played in laboratory experiments, sellers who are privately informed about their asset’s quality communicate and trade with potential buyers after both parties drink their given alcoholic beverages. We investigated the effects of alcohol consumption by varying the alcohol content of the assigned beverages across treatments. Our main findings are as follows. First, sellers with a drink of a high alcohol content lie significantly more often than those with a drink of a low alcohol content. Second, upon receiving a “High” message, buyers with a drink of a high alcohol content make higher offers for assets than those with a drink of a low alcohol content. Third, the public availability of information on alcohol content does not change players’ behavior significantly. These findings are qualitatively consistent with the model of communication with a lying cost and naive receivers, suggesting that alcohol consumption lowers both the lying cost and the receiver’s sophistication when interpreting messages, although we cannot completely rule out the possibility that the observed effect is due to something other than alcohol intoxication.

Suggested Citation

  • Au, Pak Hung & Lim, Wooyoung & Zhang, Jipeng, 2022. "In vino veritas? Communication under the influence—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 325-340.
    • Handle: RePEc:eee:jeborg:v:197:y:2022:i:c:p:325-340
    DOI: 10.1016/j.jebo.2022.02.024
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    2. Wang, Jianxin & Huang, Cailing & Xu, Lin & Zhang, Junhuan, 2023. "Drinking into friends: Alcohol drinking culture and CEO social connections," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 982-995.

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    More about this item

    Keywords

    Sender-receiver games; Communication under the influence; Laboratory experiments; Alcohol drinking; Lying;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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