Telling the Other What One Knows? Strategic Lying in a Modi ed Acquiring-a-Company Experiment with Two-sided Private Information

Andrej Angelovski, Daniela Di Cagno, Werner Güth () and Francesca Marazzi

No 1/2018, Working Papers CESARE from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: Lying for strategic advantage is analyzed via a modified Acquiring-a-Company game (Samuelson and Bazerman, 1985) where both buyers and sellers have private information about the parameters affecting their payoffs. Their different evaluations of the company are linearly linked via an undervaluation coeffcient for the seller, about which only the buyers are informed, while only the seller is aware of its actual value. Before bargaining, we allow both parties to reveal what they know via cheap-talk numerical messages. Will such mutual message exchange be reliable and enhance trade? Will misreporting prevail and be role and gender dependent? Strategic misreporting for sellers is higher throughout the experiment. Regarding gender, women misreport less, especially as sellers, and offer higher prices as buyers.

Date: 2018-09
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Journal Article: Telling the other what one knows? Strategic lying in a modified acquiring-a-company experiment with two-sided private information (2020)
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