Loss Aversion and lying behavior: Theory, estimation and empirical evidence

Ellen Garbarino (), Robert Slonim () and Marie Claire Villeval
Additional contact information
Ellen Garbarino: University of Sydney Business School, Department of Marketing, Abercrombie building, NSW 2006 Sydney, Australia
Robert Slonim: University of Sydney, Department of Economics, Merewether building, NSW 2006 Sydney, Australia; IZA, Bonn, Germany

No 1631, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We theoretically show that agents with loss-averse preferences are more likely to lie to avoid receiving a financially bad outcome the lower the probability of this bad outcome. The increased dishonesty occurs due to the expected payoff increasing as the bad outcome becomes less likely, and hence the greater the loss that can be avoided by lying. We demonstrate robust support for this role of loss aversion on lying by reanalyzing the results from the extant literature covering 74 studies and 363 treatments, and from two new experiments that vary the outcome probabilities and examine lying for personal gain and for gains to causes one supports or opposes. To measure and compare lying behavior across treatments and studies, we develop an empirical method that estimates the full distribution of dishonesty when agents privately observe the outcome of a random process and can misreport what they observed.

Keywords: Gender; loss aversion; dishonesty; econometric estimation; experimental economics; lying (search for similar items in EconPapers)
JEL-codes: C81 C91 D03 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-hpe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Loss Aversion and lying behavior: Theory, estimation and empirical evidence (2016)
Working Paper: Loss Aversion and Lying Behavior: Theory, Estimation and Empirical Evidence (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1631

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