Experimental Evidence on Deceitful Communication: Does Everyone Have a Price ?

Abstract

This paper introduces a new task to elicit individual aversion to deceiving, defined as the lowest payoff for which an individual agrees to switch from faithful to deceitful communication. The core task is a modified version of the Deception Game as presented in Gneezy (Am. Econ. Rev. 95 (1): 384 395: 2005). Deceitful communication brings about a constant loss for the receiver, and a range of benefits for the sender. A multiple-price-list mechanism is used to determine the senders communication strategy contingent on the various benefits from deception. The results show that 71% of the subjects in the sender role will implement pure or threshold communication strategies. Among them, 40% appear to be process driven, being either "ethical" or "spiteful". The other 60% respond to incentives in line with the fixed cost of lying theory; they will forego faithful communication if the benefit from deceiving the other is large enough. Regression analysis shows that this reservation payoff is independent of the risk aversion and social preferences of the subject; it would thus capture an inner preference for "behaving well".

Keywords: Deception, Communication Strategy, Cost of Lying, Inequality Aversion, Multiple Price List

JEL Classification: C91, D83