Deceptive Communication: Direct Lies vs. Ignorance, Partial-Truth and Silence

Abstract

In cases of conflict of interest, people can lie directly about payoff relevant private information, or they can evade the truth without lying directly. We analyse this situation theoretically and test the key behavioural predictions due to differences in psychological costs in a novel experimental sender-receiver setting. We find senders prefer to deceive through evasion rather than direct lying, more so when evasion takes the form of partial-truth. This is because they do nοt want to deceive others, and they do nοt want to be seen as deceptive. Receivers are highly sensitive to the language used to deceive and are more likely to act in the sender’s favour when the sender lies directly. Our findings suggest dishonesty is more prevalent and potentially costlier than its previous best estimates focusing on direct lies.

JEL Classification: C910, D820, D830, D910