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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 and treatment.
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Figure 2: Distribution of messages by return and treatment.

Mentions: We compare the results of the uncertainty treatment (234_ExAnte) with those of the ambiguity treatment (k > 1_ExAnte). Contrary to Rode (2010), we find that the proportion of subjects who tell the truth in the ambiguity treatment is significantly smaller while, the proportion of the subjects who overstate the value of k is higher (see Table 3 and Figure 2). This can be partially due to the fact that k is always equal to 3 in the ambiguity treatment. When comparing the subset of subjects in treatment 234_ExAnte for which k = 3 to those in the ambiguity treatment (k = 3), the proportion of subjects who tell the truth is much smaller in the latter, but the proportion of subjects overstating returns are not significantly different. This shows that the introduction of ambiguity encourages false messages.


Information asymmetry and deception.

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

Distribution of messages by return and treatment.
© Copyright Policy
Related In: Results  -  Collection

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

Figure 2: Distribution of messages by return and treatment.
Mentions: We compare the results of the uncertainty treatment (234_ExAnte) with those of the ambiguity treatment (k > 1_ExAnte). Contrary to Rode (2010), we find that the proportion of subjects who tell the truth in the ambiguity treatment is significantly smaller while, the proportion of the subjects who overstate the value of k is higher (see Table 3 and Figure 2). This can be partially due to the fact that k is always equal to 3 in the ambiguity treatment. When comparing the subset of subjects in treatment 234_ExAnte for which k = 3 to those in the ambiguity treatment (k = 3), the proportion of subjects who tell the truth is much smaller in the latter, but the proportion of subjects overstating returns are not significantly different. This shows that the introduction of ambiguity encourages false messages.

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.