The Way People Lie in Markets

63 Pages Posted: 17 Jul 2020

See all articles by Marie Claire Villeval

Marie Claire Villeval

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

Chloe Tergiman

The Pennsylvania State University

Multiple version iconThere are 3 versions of this paper

Date Written: June 25, 2020


In a finitely repeated game with asymmetric information, we experimentally study how reputation and standard market mechanisms change the nature of fraudulent announcements by experts. While some lies can be detected ex post by investors, other lies remain deniable. Lying behavior suggests that individuals care more about the consequences of being caught, rather than the act of lying per se. Allowing for reputation reduces the frequency of lies that can be detected but has no impact on deniable lies: individuals simply hide their lies better and fraud persists. Competition without reputation increases risky lies and never protects investment.

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

JEL Classification: C91, D01, G41, M21

Suggested Citation

Villeval, Marie Claire and Tergiman, Chloe, The Way People Lie in Markets (June 25, 2020). Available at SSRN: or

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 )


Chloe Tergiman

The Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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