Why Lying Pays: Truth Bias in the Communication with Conflicting Interests
27 Pages Posted: 14 Apr 2005
Date Written: January 15, 2005
We conduct experiments of a cheap-talk game with incomplete information in which one sender type has an incentive to misrepresent her type. Although that Sender type mostly lies in the experiments, the Receiver tends to believe the Sender's messages. This confirms "truth bias" reported in communication theory in a one-shot, anonymous environment without nonverbal cues. These results cannot be explained by existing refinement theories, while a bounded rationality model explains them under certain conditions. We claim that the theory for the evolution of language should address why truthful communication survives in the environment in which lying succeeds.
Keywords: Cheap talk, Communication, Private information, Experiment, Equilibrium refinement, Bounded Rationality
JEL Classification: C72, C92, D82
Suggested Citation: Suggested Citation