Preferences for Truthfulness: Heterogeneity Among and Within Individuals
University of Geneva - Graduate School of Business (HEC-Geneva); Ecole Polytechnique Fédérale de Lausanne - Swiss Finance Institute
University of Zurich - Department of Banking and Finance
Alexander F. Wagner
University of Zurich - Department of Banking and Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute
April 10, 2012
American Economic Review, 2013, vol. 103, pp. 532-548
Swiss Finance Institute Research Paper No. 08-48
We conduct an experiment assessing the extent to which people trade off the economic costs of truthfulness against the intrinsic costs of lying. The results allow us to reject a type-based model. People's preferences for truthfulness do not identify them as only either "economic types" (who care only about consequences) or "ethical types" (who care only about process). Instead, we find that preferences for truthfulness are heterogeneous among individuals. Moreover, when examining possible sources of intrinsic costs of lying and their interplay with economic costs of truthfulness, we find that preferences for truthfulness are also heterogeneous within individuals.
Number of Pages in PDF File: 40
Keywords: Ethics, incentives, protected values, social norms, earnings management, truthfulness, honesty
JEL Classification: A13, C91, G30, M14
Date posted: January 6, 2009 ; Last revised: June 3, 2013
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