Honest Lies

31 Pages Posted: 4 Apr 2011

See all articles by Li Hao

Li Hao

University of Arkansas - Department of Economics

Daniel Houser

Interdisciplinary Center for Economic Science

Date Written: March 6, 2010

Abstract

We report data from a two-stage prediction game, where the accuracy of predictions (in the first stage) regarding die roll outcomes (in the second stage) is rewarded using a proper scoring rule. Thus, given the opportunity to self-report the die roll outcomes, participants have an incentive to bias their predictions to maximize elicitation payoffs. However, we find participants to be surprisingly unresponsive to this incentive, despite clear evidence that they cheated when self-reporting die roll outcomes. These data lend support to Akerlof's (1983) suggestion that people may prefer to appear honest without actually being honest. In particular, the vast majority (95%) of our subjects were willing to incur a cost to preserve an honest appearance. At the same time, only 44% exhibited intrinsic preference for honesty. Moreover, we found that after establishing an honest appearance people cheat to the greatest possible extent. These results suggest that "incomplete cheating" behavior frequently reported in the literature can be attributed more to a preference for maintaining appearances than an intrinsic aversion to maximum cheating.

Suggested Citation

Hao, Li and Houser, Daniel, Honest Lies (March 6, 2010). GMU Working Paper in Economics No. 11-16, Available at SSRN: https://ssrn.com/abstract=1801546 or http://dx.doi.org/10.2139/ssrn.1801546

Li Hao (Contact Author)

University of Arkansas - Department of Economics ( email )

Fayetteville, AR 72701
United States
4795758167 (Phone)

HOME PAGE: http://comp.uark.edu/~lhao

Daniel Houser

Interdisciplinary Center for Economic Science ( email )

5th Floor, Vernon Smith Hall
George Mason University
Arlington, VA 22201
United States
7039934856 (Phone)

HOME PAGE: http://mason.gmu.edu/~dhouser/

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