Truth, trust, and sanctions: On institutional selection in sender-receiver games

Ronald Peeters (), Marc Vorsatz () and Markus Walzl ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: We conduct a laboratory experiment to investigate the impact of institutions and institutional choice on truth-telling and trust in sender-receiver games. We find that in an institution with sanctioning opportunities, receivers sanction predominantly after having trusted lies. Individuals who sanction are responsible for truth-telling beyond standard equilibrium predictions and are more likely to choose the sanctioning institution. Sanctioning and non-sanctioning institutions coexist if their choice is endogenous and the former shows a higher level of truth-telling but lower material payoffs. It is shown that our experimental findings are consistent with the equilibrium analysis of a logit agent quantal response equilibrium with two distinct groups of individuals: one consisting of subjects who perceive non-monetary lying costs as senders and non-monetary costs when being lied to as receivers and one consisting of payoff maximizers.

Keywords: Experiment; Sender-receiver games; Strategic information transmission; Institutional selection (search for similar items in EconPapers)
JEL-codes: C91 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-soc
Date: 2011-12
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Related works:
Journal Article: Truth, Trust, and Sanctions: On Institutional Selection in Sender–Receiver Games (2013)
Working Paper: Truth, trust, and sanctions: On institutional selection in sender-receiver games (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:inn:wpaper:2011-28

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