Preferences for Truthfulness: Heterogeneity Among and Within Individuals

40 Pages Posted: 6 Jan 2009 Last revised: 3 Jun 2013

Rajna Gibson

University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute

Carmen Tanner

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

Date Written: April 10, 2012

Abstract

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.

Keywords: Ethics, incentives, protected values, social norms, earnings management, truthfulness, honesty

JEL Classification: A13, C91, G30, M14

Suggested Citation

Gibson , Rajna and Tanner, Carmen and Wagner, Alexander F., Preferences for Truthfulness: Heterogeneity Among and Within Individuals (April 10, 2012). American Economic Review, 2013, vol. 103, pp. 532-548; Swiss Finance Institute Research Paper No. 08-48. Available at SSRN: https://ssrn.com/abstract=1323283 or http://dx.doi.org/10.2139/ssrn.1323283

Rajna Gibson (Contact Author)

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland
+41.22.379.89.83 (Phone)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Carmen Tanner

University of Zurich - Department of Banking and Finance ( email )

CH-8032 Zurich
Switzerland

Alexander F. Wagner

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 14
Zürich, 8032
Switzerland
+41 44 634 3963 (Phone)

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Swiss Finance Institute ( email )

Switzerland

HOME PAGE: http://www.alex-wagner.com

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