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Is It a Lie If I Don’t Know? Mechanisms and Mitigation of Dishonesty Under Ignorance

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  • Sven A. Simon

Abstract

Ignorance of facts and laws may provide an excuse for self-serving reporting behavior, even at the risk of telling the untruth. This paper examines what decision-makers report when they do not know their true entitlement to a financial gain, why they do so, and how the resulting dilemma under ignorance can be mitigated. In a theory-guided online experiment, I show that ignorance substantially increases self-serving but potentially untruthful reporting behavior relative to a full-information benchmark. Three mechanisms – two behavioral and one institutional – drive this shift: (i) decision-makers' beliefs about their true entitlement, (ii) social norms governing reporting under ignorance, and (iii) the requirement to provide a definite statement. I evaluate two interventions: allowing information acquisition and offering a fair buyout of the unknown entitlement. Both mitigate self-serving reporting under ignorance, but the fair buyout involves a trade-off: it has the unintended side effect of increasing dishonesty among informed decision-makers.

Suggested Citation

  • Sven A. Simon, 2026. "Is It a Lie If I Don’t Know? Mechanisms and Mitigation of Dishonesty Under Ignorance," CESifo Working Paper Series 12985, CESifo.
    • Handle: RePEc:ces:ceswps:_12985
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    Keywords

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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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