Advertisement

Lies and consequences

The effect of lie detection on communication outcomes
  • Ivan BalbuzanovEmail author
Original Paper

Abstract

I study a strategic-communication game between an informed sender and an uninformed receiver with partially aligned preferences. The receiver is endowed with the ability to probabilistically detect if the sender is lying. Specifically, if the sender is making a false claim about her type, with some commonly known probability p the receiver additionally observes a private signal indicating that the sender is lying. The main result is that the receiver’s stochastic lie-detection ability makes fully revealing equilibria—the best outcome for the receiver—possible, even for small p (less than \(\frac{1}{2}\)). Additionally, if the language consists of precise messages, fully revealing equilibria exist only for \(p=1\) and for a set of intermediate values of p that is bounded away from 0 and 1, making the maximal ex-ante expected equilibrium utility of the receiver non-monotone in p. If vague messages are allowed, full revelation can be supported for all large enough p, overturning the non-monotonicity and improving communication outcomes relative to the precise-language case.

Keywords

Cheap talk Persuasion game Lie detection 

JEL Classification

D83 

Notes

Acknowledgements

I have greatly benefited from comments from the associate editor, the anonymous referees and from David Ahn, Wioletta Dziuda, Haluk Ergin, Nisvan Erkal, Joseph Farrell, Johannes Hörner, Yuichiro Kamada, Maciej Kotowski, Botond Kőszegi, Matthew Leister, Simon Loertscher, Cesar Martinelli, John Morgan, Takeshi Murooka, Omar Nayeem, Santiago Oliveros, In-Uck Park, Matthew Rabin, Roberto Raimondo, Antonio Rosato, Emilia Tjernström, Steven Williams, and participants at the 2016 APET Workshop on Democracy, Public Policy, and Information at Deakin University. Any remaining errors are my own.

References

  1. Ambrus A, Azevedo E, Kamada Y (2013) Hierarchical cheap talk. Theor Econ 8(1):233–261Google Scholar
  2. Banks J (1990) A model of electoral competition with incomplete information. J Econ Theory 50(2):309–325Google Scholar
  3. Belot M, van de Ven J (2017) How private is private information? The ability to spot deception in an economic game. Exp Econ 20(1):19–43Google Scholar
  4. Belot M, Bhaskar V, van de Ven J (2012) Can observers predict trustworthiness? Rec Econ Stat 94(1):246–259Google Scholar
  5. Bernheim B, Severinov S (2003) Bequests as signals: an explanation for the equal division puzzle. J Polit Econ 111(4):733–764Google Scholar
  6. Blume A, Board O, Kawamura K (2007) Noisy talk. Theor Econ 2(4):395–440Google Scholar
  7. Border K, Sobel J (1987) Samurai accountant: a theory of auditing and plunder. Rev Econ Stud 54(4):525–540Google Scholar
  8. Brosig J (2002) Identifying cooperative behavior: some experimental results in a prisoner’s dilemma game. J Econ Behav Organ 47(3):275–290Google Scholar
  9. Callander S, Wilkie S (2007) Lies, damned lies, and political campaigns. Games Econ Behav 60(2):262–286Google Scholar
  10. Celik G (2006) Mechanism design with weaker incentive compatibility constraints. Games Econ Behav 56(1):37–44Google Scholar
  11. Chen J, Houser D (2016) Promises and lies: can observers detect deception in written messages. Exp EconGoogle Scholar
  12. Chen Y (2009) Communication with two-sided asymmetric information. MimeoGoogle Scholar
  13. Chen Y (2011) Perturbed communication games with honest senders and naive receivers. J Econ Theory 146(2):401–424Google Scholar
  14. Chen Y (2012) Value of public information in sender-receiver games. Econ Lett 114(3):343–345Google Scholar
  15. Chen Y, Kartik N, Sobel J (2008) Selecting cheap-talk equilibria. Econometrica 76(1):117–136Google Scholar
  16. Crawford V, Sobel J (1982) Strategic information transmission. Econometrica 50(6):1431–1451Google Scholar
  17. Deneckere R, Severinov S (2008) Mechanism design with partial state verifiability. Games Econ Behav 64(2):487–513Google Scholar
  18. Duffy J, Feltovich N (2006) Words, deeds, and lies: strategic behaviour in games with multiple signals. Rev Econ Stud 73(3):669–688Google Scholar
  19. Dziuda W, Salas C (2018) Communication with detectable deceit. MimeoGoogle Scholar
  20. Ekman P (2009) Telling lies: clues to deceit in the marketplace, politics, and marriage. W. W. NortonGoogle Scholar
  21. Farrell J (1993) Meaning and credibility in cheap-talk games. Games Econ Behav 5(4):514–531Google Scholar
  22. Farrell J, Rabin M (1996) Cheap talk. J Econ Perspect 10(3):103–118Google Scholar
  23. Forges F, Koessler F (2005) Communication equilibria with partially verifiable types. J Math Econ 41(7):793–811Google Scholar
  24. Frank R, Gilovich T, Regan D (1993) The evolution of one-shot cooperation: an experiment. Ethol Sociobiol 14(4):247–256Google Scholar
  25. Frohlich N, Oppenheimer J (1998) Some consequences of e-mail vs. face-to-face communication in experiments. J Econ Behav Organ 35(3):389–403Google Scholar
  26. Glazer J, Rubinstein A (2012) A model of persuasion with boundedly rational agents. J Polit Econ 120(6):1057–1082Google Scholar
  27. Golosov M, Skreta V, Tsyvinski A, Wilson A (2014) Dynamic strategic information transmission. J Econ Theory 151:304–341Google Scholar
  28. Goltsman M, Hörner J, Pavlov G, Squintani F (2009) Mediation, arbitration and negotiation. J Econ Theory 144(4):1397–1420Google Scholar
  29. Green J, Laffont J (1986) Partially verifiable information and mechanism design. Rev Econ Stud 53(3):447–456Google Scholar
  30. Grossman S (1981) The informational role of warranties and private disclosure about product quality. J Law Econ 24(3):461–483Google Scholar
  31. Hagenbach J, Koessler F, Perez-Richet E (2014) Certifiable pre-play communication: full disclosure. Econometrica 82(3):1093–1131Google Scholar
  32. Hayano D (1980) Communicative competency among poker players. J Commun 30(2):113–120Google Scholar
  33. Hodler R, Loertscher S, Rohner D (2014) Persuasion, binary choice, and the costs of dishonesty. Econ Lett 124(2):195–198Google Scholar
  34. Holm H (2010) Truth and lie detection in bluffing. J Econ Behav Organ 76(2):318–324Google Scholar
  35. Holm H, Kawagoe T (2010) Face-to-face lying—an experimental study in Sweden and Japan. J Econ Psychol 31(3):310–321Google Scholar
  36. Ishida J, Shimizu T (2016) Cheap talk with an informed receiver. Econ Theory Bull 4(1):61–72Google Scholar
  37. Ivanov M (2010) Communication via a strategic mediator. J Econ Theory 145(2):869–884Google Scholar
  38. Kartik N (2009) Strategic communication with lying costs. Rev Econ Stud 76(4):1359–1395Google Scholar
  39. Kartik N, Ottaviani M, Squintani F (2007) Credulity, lies, and costly talk. J Econ Theory 134(1):93–116Google Scholar
  40. Lai E (2014) Expert advice for amateurs. J Econ Behav Organ 103:1–16Google Scholar
  41. Lipman B, Seppi D (1995) Robust inference in communication games with partial provability. J Econ Theory 66(2):370–405Google Scholar
  42. Loftus E, Hoffman H (1989) Misinformation and memory: the creation of new memories. J Exp Psychol Gen 118(1):100–104Google Scholar
  43. Martinelli C, Parker S (2009) Deception and misreporting in a social program. J Eur Econ Assoc 7(4):886–908Google Scholar
  44. Mathis J (2008) Full revelation of information in sender-receiver games of persuasion. J Econ Theory 143(1):571–584Google Scholar
  45. Matthews S, Okuno-Fujiwara M, Postlewaite A (1991) Refining cheap-talk equilibria. J Econ Theory 55(2):247–273Google Scholar
  46. Milgrom P (1981) Good news and bad news: representation theorems and applications. Bell J Econ 12(2):380–391Google Scholar
  47. Mookherjee D, Png I (1989) Optimal auditing, insurance, and redistribution. Q J Econ 104(2):399–415Google Scholar
  48. Myerson R (1991) Game theory: analysis of conflict. Harvard University Press, CambridgeGoogle Scholar
  49. Mylovanov T, Zapechelnyuk A (2017) Optimal allocation with ex post verification and limited penalties. Am Econ Rev 107(9):2666–2694Google Scholar
  50. Olszewski W (2004) Informal communication. J Econ Theory 117(2):180–200Google Scholar
  51. Ottaviani M (2000) The economics of advice. MimeoGoogle Scholar
  52. Ottaviani M, Squintani F (2006) Naive audience and communication bias. Int J Game Theory 35(1):129–150Google Scholar
  53. Radner R, Schotter A (1989) The sealed-bid mechanism: an experimental study. J Econ Theory 48(1):179–220Google Scholar
  54. Seidmann D, Winter E (1997) Strategic information transmission with verifiable messages. Econometrica 65(1):163–169Google Scholar
  55. Sobel J (2009) Signaling games. In: Meyers R (ed) Encyclopedia of complexity and systems science. Springer, New York, NY, pp 8125–8139Google Scholar
  56. Sobel J (2013) Giving and receiving advice. In: Acemoglu D, Arellano M, Dekel E (eds) Advances in economics and econometrics: tenth World Congress. Cambridge University Press, CambridgeGoogle Scholar
  57. Townsend R (1979) Optimal contracts and competitive markets with costly state verification. J Econ Theory 21(2):265–93Google Scholar
  58. Valley K, Moag J, Bazerman M (1998) ‘A matter of trust’: effects of communication on the efficiency and distribution of outcomes. J Econ Behav Organ 34(2):211–238Google Scholar
  59. Valley K, Thompson L, Gibbons R, Bazerman M (2002) How communication improves efficiency in bargaining games. Games Econ Behav 38(1):127–155Google Scholar
  60. Vrij A (2008) Detecting lies and deceit. Wiley, HobokenGoogle Scholar
  61. Wang J, Spezio M, Camerer C (2010) Pinocchio’s pupil: using eyetracking and pupil dilation to understand truth telling and deception in sender-receiver games. Am Econ Rev 100(3):984–1007Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of EconomicsThe University of MelbourneUniversity of MelbourneAustralia

Personalised recommendations