The Way People Lie in Markets: Detectable vs. Deniable Lies

Chloe Tergiman, Marie Claire Villeval

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

In a finitely repeated game with asymmetric information, we experimentally study how individuals adapt the nature of their lies when settings allow for reputation building. Although some lies can be detected ex post by the uninformed party, others remain deniable. We find that traditional market mechanisms, such as reputation, generate strong changes in the way people lie and lead to strategies in which individuals can maintain plausible deniability; people simply hide their lies better by substituting deniable lies for detectable lies. Our results highlight the limitations of reputation to root out fraud when a deniable lie strategy is available.

Original languageEnglish (US)
Pages (from-to)3340-3357
Number of pages18
JournalManagement Science
Volume69
Issue number6
DOIs
StatePublished - Jun 2023

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research

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