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Truth, trust, and sanctions: On institutional selection in sender-receiver games

Author

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  • Ronald Peeters

    ()

  • Marc Vorsatz

    ()

  • Markus Walzl

    ()

Abstract

We conduct a laboratory experiment to investigate the impact of institutions and institutional choice on truth-telling and trust in sender-receiver games. We find that in an institution with sanctioning opportunities, receivers sanction predominantly after having trusted lies. Individuals who sanction are responsible for truth-telling beyond standard equilibrium predictions and are more likely to choose the sanctioning institution. Sanctioning and non-sanctioning institutions coexist if their choice is endogenous and the former shows a higher level of truth-telling but lower material payoffs. It is shown that our experimental findings are consistent with the equilibrium analysis of a logit agent quantal response equilibrium with two distinct groups of individuals: one consisting of subjects who perceive non-monetary lying costs as senders and non-monetary costs when being lied to as receivers and one consisting of payoff maximizers.

Suggested Citation

  • Ronald Peeters & Marc Vorsatz & Markus Walzl, 2011. "Truth, trust, and sanctions: On institutional selection in sender-receiver games," Working Papers 2011-28, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2011-28
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Abdolkarim Sadrieh & Guido Voigt, 2017. "Strategic risk in supply chain contract design," Journal of Business Economics, Springer, vol. 87(1), pages 125-153, January.
    2. Gurdal, Mehmet Y. & Ozdogan, Ayca & Saglam, Ismail, 2013. "Cheap talk with simultaneous versus sequential messages," MPRA Paper 45727, University Library of Munich, Germany.
    3. Khalmetski, Kiryl & Rockenbach, Bettina & Werner, Peter, 2017. "Evasive lying in strategic communication," Journal of Public Economics, Elsevier, vol. 156(C), pages 59-72.
    4. Raúl López-Pérez & Eli Spiegelman, 2013. "Why do people tell the truth? Experimental evidence for pure lie aversion," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 233-247, September.
    5. Sascha Behnk & Iván Barreda-Tarrazona & Aurora García-Gallego, 2017. "An experimental test of reporting systems for deception," Working Papers 2017/11, Economics Department, Universitat Jaume I, Castellón (Spain).
    6. Mehmet Gurdal & Ayca Ozdogan & Ismail Saglam, 2014. "Truth-telling and trust in sender–receiver games with intervention: an experimental study," Review of Economic Design, Springer;Society for Economic Design, vol. 18(2), pages 83-103, June.
    7. Peeters, Ronald & Vorsatz, Marc & Walzl, Markus, 2015. "Beliefs and truth-telling: A laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 113(C), pages 1-12.
    8. Cardak, Buly A & Neelim, Ananta & Vecci, Joseph & Wu, Kevin, 2017. "Would I lie to you? Strategic deception in the face of uncertain penalties," Working Papers in Economics 689, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Experiment; Sender-receiver games; Strategic information transmission; Institutional selection;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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