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Information asymmetry and deception.

Clots-Figueras I, Hernán-González R, Kujal P - Front Behav Neurosci (2015)

Bottom Line: Situations such as an entrepreneur overstating a project's value, or a superior choosing to under or overstate the gains from a project to a subordinate are common and may result in acts of deception.We find greater lying when the distribution of the multiplier is unknown by the investors than when they know the distribution.Further, messages make beliefs about the multiplier more pessimistic when the investors know the distribution of the multiplier, while the opposite is true when they do not know the distribution.

View Article: PubMed Central - PubMed

Affiliation: Department of Economics, Universidad Carlos III de Madrid Spain.

ABSTRACT
Situations such as an entrepreneur overstating a project's value, or a superior choosing to under or overstate the gains from a project to a subordinate are common and may result in acts of deception. In this paper we modify the standard investment game in the economics literature to study the nature of deception. In this game a trustor (investor) can send a given amount of money to a trustee (or investee). The amount received is multiplied by a certain amount, k, and the investee then decides on how to divide the total amount received. In our modified game the information on the multiplier, k, is known only to the investee and she can send a non-binding message to the investor regarding its value. We find that 66% of the investees send false messages with both under and over, statement being observed. Investors are naive and almost half of them believe the message received. We find greater lying when the distribution of the multiplier is unknown by the investors than when they know the distribution. Further, messages make beliefs about the multiplier more pessimistic when the investors know the distribution of the multiplier, while the opposite is true when they do not know the distribution.

No MeSH data available.


Distribution of messages by return. Treatment is 234_ExAnte.
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Figure 1: Distribution of messages by return. Treatment is 234_ExAnte.

Mentions: We will now look at results from the treatment (234_ExAnte) where k can take any value from the distribution {2, 3, 4} with equal probability. Investees can choose to send a message, or none, regarding the value of k. We have data from 134 students, organized in 67 pairs. First we identify those who sent false messages and those who told the truth (see Figure 1). Of all investees in this treatment, 14.93% decided not to send any message while, 11.94% sent a message outside of the known distribution. We consider these two groups as sending an uninformative message. Investees may choose not to send a message due to two reasons. One may be that they think that any message they send may be considered as “cheap talk.” On the other hand a message may not be sent to not transmit any information to the investor.11


Information asymmetry and deception.

Clots-Figueras I, Hernán-González R, Kujal P - Front Behav Neurosci (2015)

Distribution of messages by return. Treatment is 234_ExAnte.
© Copyright Policy
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4508524&req=5

Figure 1: Distribution of messages by return. Treatment is 234_ExAnte.
Mentions: We will now look at results from the treatment (234_ExAnte) where k can take any value from the distribution {2, 3, 4} with equal probability. Investees can choose to send a message, or none, regarding the value of k. We have data from 134 students, organized in 67 pairs. First we identify those who sent false messages and those who told the truth (see Figure 1). Of all investees in this treatment, 14.93% decided not to send any message while, 11.94% sent a message outside of the known distribution. We consider these two groups as sending an uninformative message. Investees may choose not to send a message due to two reasons. One may be that they think that any message they send may be considered as “cheap talk.” On the other hand a message may not be sent to not transmit any information to the investor.11

Bottom Line: Situations such as an entrepreneur overstating a project's value, or a superior choosing to under or overstate the gains from a project to a subordinate are common and may result in acts of deception.We find greater lying when the distribution of the multiplier is unknown by the investors than when they know the distribution.Further, messages make beliefs about the multiplier more pessimistic when the investors know the distribution of the multiplier, while the opposite is true when they do not know the distribution.

View Article: PubMed Central - PubMed

Affiliation: Department of Economics, Universidad Carlos III de Madrid Spain.

ABSTRACT
Situations such as an entrepreneur overstating a project's value, or a superior choosing to under or overstate the gains from a project to a subordinate are common and may result in acts of deception. In this paper we modify the standard investment game in the economics literature to study the nature of deception. In this game a trustor (investor) can send a given amount of money to a trustee (or investee). The amount received is multiplied by a certain amount, k, and the investee then decides on how to divide the total amount received. In our modified game the information on the multiplier, k, is known only to the investee and she can send a non-binding message to the investor regarding its value. We find that 66% of the investees send false messages with both under and over, statement being observed. Investors are naive and almost half of them believe the message received. We find greater lying when the distribution of the multiplier is unknown by the investors than when they know the distribution. Further, messages make beliefs about the multiplier more pessimistic when the investors know the distribution of the multiplier, while the opposite is true when they do not know the distribution.

No MeSH data available.