Truth-telling and trust in sender–receiver games with intervention: an experimental study

Recent experimental studies find excessive truth-telling in sender–receiver games. We show that this phenomenon is robust to the random intervention of a truthful regulator. In addition, intervention significantly increases the excessive trust of receivers while the overall percentage of truthful me...

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Bibliographic Details
Published in:Review of economic design 2014-06, Vol.18 (2), p.83-103
Main Authors: Gurdal, Mehmet Y., Ozdogan, Ayca, Saglam, Ismail
Format: Article
Language:English
Subjects:
Behavior
Behavioral/Experimental Economics
Economic models
Economic statistics
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Equilibrium
Game Theory
Games
Microeconomics
Original Paper
Social and Behav. Sciences
Studies
Trust
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Summary:Recent experimental studies find excessive truth-telling in sender–receiver games. We show that this phenomenon is robust to the random intervention of a truthful regulator. In addition, intervention significantly increases the excessive trust of receivers while the overall percentage of truthful messages received does not change much with or without intervention. We offer a theoretical explanation for the behavior of senders and receivers, using a logit agent quantal response equilibrium (logit-AQRE) model incorporating a non-monetary lying cost for senders (like Peeters et al. in Scand J Econ 115(2):508–548, 2013 ). We show that our experimental findings are all consistent with the predictions of this model. Moreover, we find that the lying cost is significantly higher under intervention, implying that truthful intervention is beneficial for receivers and justified as a tool for policy makers acting on behalf of informationally inferior parties.
ISSN:1434-4742
1434-4750
DOI:10.1007/s10058-013-0155-9