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Externalities, stakes, and lying

Uri Gneezy and Agne Kajackaite

Journal of Economic Behavior & Organization, 2020, vol. 178, issue C, 629-643

Abstract: We study an observed cheating game in which senders can earn money by lying to the experimenter, knowing the experimenter will later be able to observe whether they told the truth or lied. We modify the game by matching each sender with a receiver, whose earnings negatively correlate with the earnings of the sender. Our results show that senders lie less when matched with a receiver who loses money if they lie. However, once we increase the stakes by a factor of five, participants lie as much in the two-player game as in the one-player game. That is, an externality reduces lying but only as long as the stakes are low.

Keywords: Lying; Cheating; Stakes; Fairness; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 D82 D91 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jebo.2020.08.020

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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Handle: RePEc:eee:jeborg:v:178:y:2020:i:c:p:629-643