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Information asymmetry and deception

Clots-Figueras, I., Gonzales, R.H., Kujal, P. (2015) Information asymmetry and deception. Frontiers in Behavioral Neuroscience, 9 (July). ISSN 1662-5153. (doi:10.3389/fnbeh.2015.00109)

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http://dx.doi.org/10.3389/fnbeh.2015.00109

Abstract

Situations such as an entrepreneur overstating a project's value, or a superior choosing to under or overstate the gains from a project to a subordinate are common and may result in acts of deception. In this paper we modify the standard investment game in the economics literature to study the nature of deception. In this game a trustor (investor) can send a given amount of money to a trustee (or investee). The amount received is multiplied by a certain amount, k, and the investee then decides on how to divide the total amount received. In our modified game the information on the multiplier, k, is known only to the investee and she can send a non-binding message to the investor regarding its value. We find that 66% of the investees send false messages with both under and over, statement being observed. Investors are naive and almost half of them believe the message received. We find greater lying when the distribution of the multiplier is unknown by the investors than when they know the distribution. Further, messages make beliefs about the multiplier more pessimistic when the investors know the distribution of the multiplier, while the opposite is true when they do not know the distribution. © 2015 Clots-Figueras, Hernán-González and Kujal.

Item Type: Article
DOI/Identification number: 10.3389/fnbeh.2015.00109
Uncontrolled keywords: Asymmetric information, Deception, Investment game, Overstatement, Understatement, Article, cognition, deception, economics, financial management, guilt, human, human experiment, information processing, interpersonal communication, investment, normal human, pessimism, questionnaire, uncertainty, verbal behavior, volunteer
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Irma Clots-Figueras
Date Deposited: 18 Jul 2019 11:35 UTC
Last Modified: 01 Aug 2019 10:45 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/75369 (The current URI for this page, for reference purposes)
Clots-Figueras, I.: https://orcid.org/0000-0003-3859-0838
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