Beliefs and truth-telling: A laboratory experiment

• We analyze the impact of first- and second order beliefs in an experimental sender receiver game.
• Since second-order beliefs are uncorrelated to actions, excessive truth-telling with respect to the sequential equilibrium cannot be explained by guilt aversion.
• Per se lying costs, on the other hand, cannot be rejected.
• By comparing the outcome of the sender receiver game with a payoff equivalent game of matching pennies a natural benchmark is provided.
• Beliefs are elicited in an incentive compatible way.

We conduct a laboratory experiment with a constant-sum sender–receiver game and a sequential game of matching pennies with the same payoff structure to investigate the impact of individuals’ first- and second-order beliefs on truth-telling. While first-movers in matching pennies choose an action at random, senders in the sender–receiver game tell the truth more often than they lie. Since second-order beliefs are uncorrelated with actions in both games, excessive truth-telling is unlikely to be driven by guilt aversion or preferences for truth-telling that are based on second-order beliefs; preferences for truth-telling per-se, on the other hand, cannot be rejected.