Honesty in the Digital Age

Abstract

Modern communication technologies enable efficient exchange of information, but often sacrifice direct human interaction inherent in more traditional forms of communication. This raises the question of whether the lack of personal interaction induces individuals to exploit informational asymmetries. We conducted two experiments with 866 subjects to examine how human versus machine interaction influences cheating for financial gain. We find that individuals cheat significantly more when they interact with a machine rather than a person, regardless of whether the machine is equipped with human features. When interacting with a human, individuals are particularly reluctant to report unlikely favorable outcomes, which is consistent with social image concerns. The second experiment shows that dishonest individuals prefer to interact with a machine when facing an opportunity to cheat. Our results suggest that human interaction is key to mitigating dishonest behavior and that self-selection into communication channels can be used to screen for dishonest people.

Keywords: cheating, honesty, private information, communication, digitization, lying costs

JEL Classification: C990, D820, D830