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The Way People Lie in Markets

Chloe Tergiman () and Marie Claire Villeval
Additional contact information
Chloe Tergiman: Smeal College of Business, 334 Business Building, Penn State University

No 1927, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: In a finitely repeated game with asymmetric information, we experimentally study how reputation and standard market mechanisms change the nature of fraudulent announcements by experts. While some lies can be detected ex post by investors, other lies remain deniable. Lying behavior suggests that individuals care more about the consequences of being caught, rather than the act of lying per se. Allowing for reputation reduces the frequency of lies that can be detected but has no impact on deniable lies: individuals simply hide their lies better and fraud persists. Competition without reputation increases risky lies and never protects investment.

Keywords: Dishonesty; Reputation; Competition; Financial Markets; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D01 G41 M21 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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ftp://ftp.gate.cnrs.fr/RePEc/2019/1927.pdf (application/pdf)

Related works:
Working Paper: The way people lie in markets (2020)
Working Paper: The way people lie in markets (2020)
Working Paper: The Way People Lie in Markets (2019) Downloads
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