Identifying Insincere and Sincere Bias Through Post-Report Interactions

Abstract

Advisors frequently have an interest in the decisions their advisees make, forcing advisees to distinguish their advisor’s unbiased beliefs from their self-interested bias. This task is likely to be especially hard when psychological forces distort advisors’ beliefs to make some of their bias sincerely held. In our first experiment, we show that advisors bias both their recommendations and their own actions toward their persuasion goal, and that advisees are better at distinguishing between the unbiased, sincerely biased, and insincerely biased parts of their advisor’s recommendation when they meet face-to-face to discuss, compared with when they receive only a written recommendation. Our second experiment shows that advisees distinguish their advisor’s bias from their advisor’s unbiased beliefs more accurately when the advisors are asked to provide fact-based information about their own actions. Both experiments show that post-report interactions are more helpful for identifying insincere bias than sincere bias.

Keywords: Conflicts of interest, deception, deception detection, persuasion, sincerity, cheap-talk, reporting, self-deception

JEL Classification: G14, G31, D82, D83, D80, C72, M41, M30, M40