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The value of lies in an ultimatum game with imperfect information

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  • Damien Besancenot

    () (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Delphine Dubart

    (ESSEC Business School - Essec Business School)

  • Radu Vranceanu

    () (Economics Department - Essec Business School)

Abstract

Humans often lie strategically. We study this problem in an ultimatum game involving informed proposers and uninformed responders, where the former can send an unverifiable statement about their endowment. If there are some intrinsically honest proposers, a simple message game shows that the rest of them are likely to declare a lower-than-actual endowment to the responders. In the second part of the paper, we report on an experiment testing this game. On average, 88.5% of the proposers understate the actual endowment by 20.5%. Regression analysis shows that a one-dollar gap between the actual and declared amounts prompts proposers to reduce their offer by 19 cents. However, responders appear not to take such claims seriously, and thus the frequency of rejections should increase. The consequence is a net welfare loss, that is specific to such a "free-to-lie" environment.

Suggested Citation

  • Damien Besancenot & Delphine Dubart & Radu Vranceanu, 2012. "The value of lies in an ultimatum game with imperfect information," CEPN Working Papers hal-00692139, HAL.
  • Handle: RePEc:hal:cepnwp:hal-00692139
    Note: View the original document on HAL open archive server: https://hal-essec.archives-ouvertes.fr/hal-00692139
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    References listed on IDEAS

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