On the heterogeneity of people's (dis)honest behavior along two dimensions: Cost of lying and cost of acquiring information

Abstract

This paper studies lying in a novel context. Previous work has focused on situations in which people are either fully aware of the economic consequences of all available actions (e.g., die-under-cup paradigm), or they are uncertain, but this uncertainty cannot be cleared in any way (e.g., sender-receiver game). On the contrary, in reality, people oftentimes know that they will have a chance to lie, they are initially uncertain about the economic consequences of the available actions, but they can invest resources (e.g., time) to find them out. Here we capture the essence of this type of situations by means of a novel decision problem. Two experiments provide evidence of four empirical regularities regarding the distribution of choices, and suggest that participants vary along two dimensions: the moral cost of lying, and the cost of investing time to find out the payoffs associated to the available actions. Taking inspiration from these observations, we introduce a model that is consistent with the main empirical results.