Is It a Lie if I Don't Know? Self-Serving Dishonesty Under Ignorance

Abstract

Ignorance of facts and laws may provide an excuse for self-serving reporting behavior, even when it comes at the risk of telling the untruth. This paper studies what decision-makers report when they do not know their true entitlement to a financial gain, and why they do so. In a theory-guided experiment, I show that ignorance of one's true entitlement leads to a pronounced increase in self-serving but untruthful reporting behavior. Two factors determine the reporting decision under ignorance: (i) the decision-maker's belief of the true entitlement and (ii) the absence of a commonly accepted social norm. However, the scope of ignorance as an excuse is limited. Most individuals seek information on their true entitlement to the financial gain once they have the opportunity to do so. Complementary survey evidence highlights the prevalence of uninformed reporting decisions in the field and provides additional insights on behavioral motivations.

Keywords: lying behavior, unjustied claiming, ignorance, information avoid-ance, laboratory experiment

JEL Classification: C91, D83, D91, K42