The Way People Lie in Markets: Detectable vs. Deniable Lies

Chloe Tergiman () and Marie Claire Villeval
Additional contact information
Chloe Tergiman: Pennsylvania State University

No 14931, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In a finitely repeated game with asymmetric information, we experimentally study how individuals adapt the nature of their lies when settings allow for reputation-building. While some lies can be detected ex post by the uninformed party, others remain deniable. We find that traditional market mechanisms such as reputation generate strong changes in the way people lie and lead to strategies in which individuals can maintain plausible deniability: people simply hide their lies better by substituting deniable lies for detectable lies. Our results highlight the limitations of reputation to root out fraud when a Deniable Lie strategy is available.

Keywords: financial markets; reputation; deniability; lying; experiment (search for similar items in EconPapers)
JEL-codes: C91 D01 G41 M21 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2021-12
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
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Citations: View citations in EconPapers (3)

Published - revised version published in: Management Science , 2023, 69 (6), 3157-3758

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https://docs.iza.org/dp14931.pdf (application/pdf)

Related works:
Journal Article: The Way People Lie in Markets: Detectable vs. Deniable Lies (2023)
Working Paper: The Way People Lie in Markets: Detectable vs. Deniable Lies (2023)
Working Paper: The Way People Lie in Markets: Detectable vs. Deniable Lies (2022)
Working Paper: The Way People Lie in Markets: Detectable vs. Deniable Lies (2021)
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