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Money or Friends: Social Identity and Deception in Networks

28 Pages Posted: 5 Feb 2015 Last revised: 7 Mar 2015

Rong Rong

Weber State University (WSU)

Daniel Houser

George Mason University - Department of Economics; Interdisciplinary Center for Economic Science

Date Written: February 3, 2015


Strategic communication occurs in committee decision environments. Theory suggests that small differences in monetary incentives between committee members explains why deception may be strategically optimal (Crawford and Sobel, 1982; Galeotti et al, 2012). In natural environments, however, social incentives also play an important role in determining the way people share (or withhold) truthful information. Unfortunately, little is known about how monetary and social incentives interact to determine truth-telling. We design a laboratory experiment to address this question. We found that the effect of identity is asymmetric: sharing the same identity does not promote truth-telling but holding different identities reduces truthfulness. Moreover, we find that identity has an overall detrimental impact on truthful communication in committee decision making environments. These results have important implication for intra-organizational conflict management, suggesting that certain identity strengthening activities may produce a negative impact on information sharing.

Keywords: social networks, deception, committee decision making, strategic information transmission, parochial altruism, experiments

JEL Classification: D85, D02, C92

Suggested Citation

Rong, Rong and Houser, Daniel, Money or Friends: Social Identity and Deception in Networks (February 3, 2015). GMU Working Paper in Economics No. 15-14. Available at SSRN: or

Rong Rong (Contact Author)

Weber State University (WSU) ( email )

3802 University Circle
Ogden, UT 84408
United States

Daniel Houser

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Interdisciplinary Center for Economic Science ( email )

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

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