Article ID Journal Published Year Pages File Type
883464 Journal of Economic Behavior & Organization 2015 12 Pages PDF
Abstract

•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.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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