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Telling the Other What One Knows? Strategic Lying in a Modi ed Acquiring-a-Company Experiment with Two-sided Private Information

Author

Listed:
  • Andrej Angelovski

    (LUISS Guido Carli, Rome)

  • Daniela Di Cagno

    (LUISS Guido Carli, Rome)

  • Werner Güth

    (Luiss Guido Carli, Rome; Frankfurt School of Finance and Management, Frankfurt; Max Planck Institute on Collective Goods, Bonn)

  • Francesca Marazzi

    (LUISS Guido Carli, Rome)

Abstract

Lying for strategic advantage is analyzed via a modified Acquiring-a-Company game (Samuelson and Bazerman, 1985) where both buyers and sellers have private information about the parameters affecting their payoffs. Their different evaluations of the company are linearly linked via an undervaluation coeffcient for the seller, about which only the buyers are informed, while only the seller is aware of its actual value. Before bargaining, we allow both parties to reveal what they know via cheap-talk numerical messages. Will such mutual message exchange be reliable and enhance trade? Will misreporting prevail and be role and gender dependent? Strategic misreporting for sellers is higher throughout the experiment. Regarding gender, women misreport less, especially as sellers, and offer higher prices as buyers.

Suggested Citation

  • Andrej Angelovski & Daniela Di Cagno & Werner Güth & Francesca Marazzi, 2018. "Telling the Other What One Knows? Strategic Lying in a Modi ed Acquiring-a-Company Experiment with Two-sided Private Information," Working Papers CESARE 1/2018, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:cesare:1801
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    Cited by:

    1. Di Cagno, Daniela & Güth, Werner & Lohse, Tim & Marazzi, Francesca & Spadoni, Lorenzo, 2024. "Who cares when Value (Mis)reporting may be found out? An Acquiring-a-Company experiment with value messages and information leaks," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).

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