LIES IN DISGUISE-AN EXPERIMENTAL STUDY ON CHEATING

We present a novel experimental design to measure honesty and lying. Participants receive a die which they roll privately. Since their payoff depends on the reported roll of the die, the subjects have an incentive to be dishonest and report higher numbers to get a higher payoff. This design has three advantages. First, cheating cannot be detected on the individual level, which reduces potential demand effects. Second, the method is very easy to implement. Third, the underlying true distribution of the outcome under full honesty is known, and hence it is possible to test different theoretical predictions. We find that about 20% of inexperienced subjects lie to the fullest extent possible while 39% of subjects…