Why Lying Pays: Truth Bias in the Communication with Conflicting Interests

27 Pages Posted: 14 Apr 2005

See all articles by Toshiji Kawagoe

Toshiji Kawagoe

Future University Hakodate

Hirokazu Takizawa

Chuo University - Faculty of Economics

Date Written: January 15, 2005

Abstract

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

Kawagoe, Toshiji and Takizawa, Hirokazu, Why Lying Pays: Truth Bias in the Communication with Conflicting Interests (January 15, 2005). Available at SSRN: https://ssrn.com/abstract=691641 or http://dx.doi.org/10.2139/ssrn.691641

Toshiji Kawagoe (Contact Author)

Future University Hakodate ( email )

116-2 Kamedanakano-cho
Hakodate Hokkaido, 041-8655
Japan
+81-138-34-6424 (Phone)
+81-138-34-6301 (Fax)

Hirokazu Takizawa

Chuo University - Faculty of Economics ( email )

742-1
Higashi-Nakano, Hachioji
Tokyo, 192-0393
Japan

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