Lying in Persuasion

Abstract

We study how the speaker acquires information when they can misrepresent it in communication with the audience. We derive a method to calculate the speaker’s value from any information structure and to determine the properties of the information structure under which the speaker benefits from the ability to lie. We then characterize the speaker’s optimal information design and the parametric conditions under which the acquired information is disclosed truthfully. When the interests of the speaker and the audience are insufficiently aligned, the speaker obtains the same information as they would if they could not lie, and they communicate that information truthfully. When the interests are sufficiently aligned, the speaker chooses more persuasive information than they would without the option to lie but resorts to deceptive communication. The speaker’s loss of welfare due to the lack of commitment power is more pronounced when lies are harder to detect.