The value of lies in an ultimatum game with imperfect information

Damien Besancenot, Delphine Dubart and Radu Vranceanu

Journal of Economic Behavior & Organization, 2013, vol. 93, issue C, 239-247

Abstract: Humans often lie strategically. We study this problem in an ultimatum game with an informed proposer and an uninformed responder, where the former can send an unverifiable statement about his endowment. A simple message game with heterogenous players with respect to lying costs shows that in equilibrium liars should understate their endowment. The second part of the paper reports on an experiment testing this game. On average, 88.5% of the proposers understate the actual endowment by 20.5%. Regression analysis shows that a 1-euro gap between the actual and declared amounts prompts proposers to reduce their offer by 19 cents on average. However, responders’ decision to accept/reject the offer does not depend on the message. It results a net welfare loss specific to such a “free-to-lie” environment.

Keywords: Ultimatum game; Asymmetric information; Lying costs; Strategic lies; Deception; Welfare loss (search for similar items in EconPapers)
JEL-codes: C91 D82 D83 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Working Paper: The value of lies in an ultimatum game with imperfect information (2012)
Working Paper: The value of lies in an ultimatum game with imperfect information (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:93:y:2013:i:c:p:239-247

DOI: 10.1016/j.jebo.2013.03.029

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