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Do Liars Believe? Beliefs and Other-Regarding Preferences in Sender-Receiver Games

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  • Sheremeta, Roman
  • Shields, Timothy

Abstract

We examine subjects’ behavior in sender-receiver games where there are gains from trade and alignment of interests in one of the two states. We elicit subjects’ beliefs, risk and other-regarding preferences. Our design also allows us to examine the behavior of subjects in both roles, to determine whether the behavior in one role is the best response to the subject’s own behavior in the other role. The results of the experiment indicate that, when acting as senders, the majority of subjects adopt deceptive strategies by sending favorable message when the true state of the nature is unfavorable. When acting as receivers, the majority of subjects invest conditional upon receiving a favorable message. The investing behavior of receivers cannot be explained by risk preferences or as a best response to subject’s own behavior in the sender’s role. However, it can be rationalized by accounting for elicited beliefs and other-regarding preferences. Finally, the honest behavior of some senders can be explained by other-regarding preferences. Thus, we that find liars do believe, and that individuals who care about the payoffs of others tend to be honest.

Suggested Citation

  • Sheremeta, Roman & Shields, Timothy, 2013. "Do Liars Believe? Beliefs and Other-Regarding Preferences in Sender-Receiver Games," MPRA Paper 53595, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53595
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    Citations

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    Cited by:

    1. Brice Corgnet & Antonio M. Espín & Roberto Hernán-González, 2015. "The cognitive basis of social behavior: cognitive reflection overrides antisocial but not always prosocial motives," Working Papers 15-04, Chapman University, Economic Science Institute.
    2. Curtis R. Price & Roman M. Sheremeta, 2015. "Endowment Origin, Demographic Effects, and Individual Preferences in Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(3), pages 597-619, September.
    3. Rudolf Kerschbamer & Daniel Neururer & Alexander Gruber, 2017. "Do the altruists lie less?," Working Papers 2017-18, Faculty of Economics and Statistics, University of Innsbruck, revised 09 Nov 2017.
    4. Roman M. Sheremeta, 2016. "The pros and cons of workplace tournaments," IZA World of Labor, Institute for the Study of Labor (IZA), pages 302-302, October.
    5. Sheremeta, Roman M. & Shields, Timothy W., 2017. "Deception and reception: The behavior of information providers and users," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 445-456.
    6. Eisenkopf, Gerald & Friehe, Tim, 2014. "Stop watching and start listening! The impact of coaching and peer observation in tournaments," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 56-70.
    7. Holden, Stein T. & Tilahun , Mesfin, 2017. "Group Trust in Youth Business Groups: Influenced by Risk Tolerance and Expected Trustworthiness," CLTS Working Papers 13/17, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    8. Irlenbusch, Bernd & Ter Meer, Janna, 2013. "Fooling the Nice Guys: Explaining receiver credulity in a public good game with lying and punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 321-327.
    9. Schniter, Eric & Sheremeta, Roman & Shields, Timothy, 2015. "The Problem with All-or-nothing Trust Games: What Others Choose Not to Do Matters In Trust-based Exchange," MPRA Paper 68561, University Library of Munich, Germany.
    10. Ismayilov, Huseyn & Potters, Jan, 2013. "Disclosing advisor's interests neither hurts nor helps," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 314-320.
    11. Bernd Irlenbusch & Janna Ter Meer, 2015. "Lying in public good games with and without punishment," Cologne Graduate School Working Paper Series 06-02, Cologne Graduate School in Management, Economics and Social Sciences.
    12. Bernd Irlenbusch & Janna Ter Meer, 2012. "Fooling the Nice Guys: The effect of lying about contributions on public good provision and punishment," Cologne Graduate School Working Paper Series 03-11, Cologne Graduate School in Management, Economics and Social Sciences.
    13. Jean Paul Rabanal & Olga A. Rabanal, 2015. "Does competition affect truth-telling? An experiment with rating agencies," Working Papers 2015-48, Peruvian Economic Association.

    More about this item

    Keywords

    experiment; strategic communication; beliefs; lying; deception; other-regarding preferences;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual 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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