An experiment on deception, reputation and trust

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An experiment on deception, reputation and trust David Ettinger1 · Philippe Jehiel2,3  Received: 3 July 2017 / Revised: 10 September 2020 / Accepted: 15 September 2020 © The Author(s) 2020

Abstract An experiment is designed to shed light on how deception works. The experiment involves a twenty period sender/receiver game in which period 5 has more weight than other periods. In each period, the informed sender communicates about the realized state, the receiver then reports a belief about the state before being informed whether the sender lied. Throughout the interaction, a receiver is matched with the same sender who is either malevolent with an objective opposed to the receiver or benevolent always telling the truth. The main findings are: (1) in several variants (differing in the weight of the key period and the share of benevolent senders), the deceptive tactic in which malevolent senders tell the truth up to the key period and then lie at the key period is used roughly 25% of the time, (2) the deceptive tactic brings higher expected payoff than other observed strategies, and (3) a majority of receivers do not show cautiousness at the key period when no lie was made before. These observations do not match the predictions of the Sequential Equilibrium and can be organized using the analogy-based sequential equilibrium (ABSE) in which three quarters of subjects reason coarsely. JEL Classification  C72 · D82 We thank Marie-Claire Villeval and two anonyous reviewers for constructive comments. We thank Maxim Frolov for assistance on the experimental design, Guillaume Frechette, Guillaume Hollard, Frederic Koessler, Dov Samet, Jean Marc Tallon, and the participants of the Neuroeconomic Workshop, the Extensive form Games in the Lab Workshop, LSE-UCL workshop, LSE behavioral economics seminar, The first Socrates workshop, the ASFEE conference, the IHP, Dauphine, Cerge-EI, HEC-Polytechnique, Paris 1, Technion seminars’ participants for helpful comments. Jehiel thanks the European Research Council (Grant number 742816) for funding and Ettinger the Governance and Regulation Chair for its support. Electronic supplementary material  The online version of this article (https​://doi.org/10.1007/s1068​ 3-020-09681​-9) contains supplementary material, which is available to authorized users. * Philippe Jehiel [email protected] David Ettinger [email protected] 1

Université Paris-Dauphine, PSL Research University, CNRS, IRD, LEDa, 75016 Paris, France

2

PSE, 48 Boulevard Jourdan, 75014 Paris, France

3

University College London, London, UK



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D. Ettinger, P. Jehiel Any false matter in which they do not say a bit of truth at its beginning does not hold up at its end. Rashi, Comments on Numbers, XIII, 27. Adapted from Talmud Bavli Tractatus Sotah 35a.

1 Introduction During World War II, the Red Orchestra was the most important spying network of the Soviet Union. It was used to send information to Moscow through radio transmissions. The Germans managed to get control over the Red Orchestra net