Limits...
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.


Proportion of subjects who overstated the value ofk, understated it or told the truth. Treatment 234_ExPost.
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Figure 7: Proportion of subjects who overstated the value ofk, understated it or told the truth. Treatment 234_ExPost.

Mentions: One can see from Figure 7 that 42% told the truth about the value of k, while the rest either overstated or understated its value. Out of those who overstated k, the majority (83%) expected to receive more from the investor than what they received. In contrast, the percentage is only 56% among those who did not overstate returns. We can think of these messages as inflicting some kind of non-monetary “punishment” on the investors. That is, the investee expected to receive more from the investor and when sending the message about the value of k reported a larger number than the true value. However, when comparing those who understated the value of the returns to the rest, approximately half the subjects of each group reported that they would have returned more if the investor had known the exact value of the returns.


Information asymmetry and deception.

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

Proportion of subjects who overstated the value ofk, understated it or told the truth. Treatment 234_ExPost.
© Copyright Policy
Related In: Results  -  Collection

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

Figure 7: Proportion of subjects who overstated the value ofk, understated it or told the truth. Treatment 234_ExPost.
Mentions: One can see from Figure 7 that 42% told the truth about the value of k, while the rest either overstated or understated its value. Out of those who overstated k, the majority (83%) expected to receive more from the investor than what they received. In contrast, the percentage is only 56% among those who did not overstate returns. We can think of these messages as inflicting some kind of non-monetary “punishment” on the investors. That is, the investee expected to receive more from the investor and when sending the message about the value of k reported a larger number than the true value. However, when comparing those who understated the value of the returns to the rest, approximately half the subjects of each group reported that they would have returned more if the investor had known the exact value of the returns.

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.