Truth and Trust in Communication: An Experimental Study of Behavior under Asymmetric Information

Julian Rode ()
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Julian Rode: Universitat Pompeu Fabra, Postal: Universitat Pompeu Fabra, Ramon Trias Fargas 25-27, 08005 Barcelona, Spain

No 111, Ratio Working Papers from The Ratio Institute

Abstract: The paper presents an experimental study of truth telling and trust in communication under asymmetric information. In a two-player Communication Game (cf., Gneezy, 2005), an informed “advisor” sends a message to an uninformed “decision maker”, who then has to decide whether to follow the advice. The advisor may gain more by lying in the message. In two treatments, either a cooperative or a competitive context is induced before participants play the Communication Game. Advisors are unaffected by this contextual variation. In contrast, decision makers in the competitive context trust the advice less than in the cooperative context. The data provide evidence that this change in trust is due to different perceptions of the incentive structure. Individual differences in behavior can be related to certain personal characteristics (field of studies, gender, personality test scores). The data are largely in line with Subjective Equilibrium Analysis (Kalai & Lehrer, 1995).

Keywords: experimental economics; truth telling; trust; asymmetric information; individual differences; context effects; subjective beliefs (search for similar items in EconPapers)
JEL-codes: D01 D80 Z13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2007-04-10
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-soc
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