Money or Friends: Social Identity and Deception in Networks

Abstract

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