Speaker(s)
Sandra Maximiano (Purdue University)
Date
2010-11-26
Location
Amsterdam

Recent experimental evidence has shown that the ethical norm of telling the truth holds in impersonal, economic decisions. In particular, it is found that a considerable fraction of subjects choose to tell the truth even if lying is incentive compatible. These results are important for a better understanding of market relationships and to improve economic theory, in which information transmission has a crucial role. For example, auction theory and the design of optimal contracts can both benefit from experimental results on deceptive behavior. However, although market relationships are primarily instrumental and economic theories are impersonal, the individuals involved are not, and in many cases have close bonds. The interaction between social ties and deception behavior is, therefore, a relevant one and warrants investigation, a goal this paper aims at fulfilling. For this purpose, we implement a modified sender-receiver game in which a sender holds private information regarding a state variable and sends a message about the actual state to the receiver. We implement two treatments: strangers treatment, in which players are anonymous to each other, and friends treatment, in which players know each other from outside the lab. In contrast with existent literature, in our experiment, the receiver takes no action, which eliminates strategic deception. More important, subjects are not restricted to choose between truth telling and a unique type of lie but they have instead a multi-dimensional set of potential lies that implements different type of allocations. As such, our design solves an existent identification problem and allows us to disentangle lying aversion from social preferences. Nevertheless, we implement a modified dictator condition to further explore the relationship between social preferences and different lying patterns. Our results show that individuals have different degrees of lying aversion, they lie according to their social preferences, and friendship is an important variable to understand and characterize lying behavior.