The Way People Lie in Markets

71 Pages Posted: 27 Sep 2019 Last revised: 20 Jul 2020

See all articles by Chloe Tergiman

Chloe Tergiman

The Pennsylvania State University

Marie Claire Villeval

Groupe d'Analyse et de Théorie Economique (GATE), CNRS; IZA Institute of Labor Economics; Global Labor Organization (GLO)

Multiple version iconThere are 2 versions of this paper

Date Written: July 17, 2020


In a fi nitely repeated game with asymmetric information, we experimentally study how individuals adapt their lying when settings allow for reputation and/or competition. While some lies can be detected ex post by the uninformed party, others remain deniable. We fi nd that traditional market mechanisms, especially reputation, generate strong changes in the way people lie but do not
fundamentally lead to more honesty: people simply hide their lies better by substituting deniable lies for detectable lies. Our results highlight the limitations of traditional market mechanisms to root out fraud and stand in sharp contrast with the existing literature on intrinsic preferences for honesty.

Keywords: Dishonesty, Reputation, Competition, Financial Markets, Experiment

JEL Classification: C91, D01, G41, M21

Suggested Citation

Tergiman, Chloe and Villeval, Marie Claire, The Way People Lie in Markets (July 17, 2020). Available at SSRN: or

Chloe Tergiman

The Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Marie Claire Villeval (Contact Author)

Groupe d'Analyse et de Théorie Economique (GATE), CNRS ( email )

93, chemin des Mouilles
Ecully, 69130
+33 472 86 60 79 (Phone)
+33 472 86 60 90 (Fax)


IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Global Labor Organization (GLO) ( email )


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