nep-exp New Economics Papers
on Experimental Economics
Issue of 2024‒01‒22
twenty papers chosen by



  1. Algorithmic price recommendations and collusion: Experimental evidence By Hunold, Matthias; Werner, Tobias
  2. An experimental test of a greenwashing inoculation intervention: Effects on identification, trust and intentions By Timmons, Shane; Whelan, Ava; Kelly, Clare
  3. Nudging for Prompt Tax Penalty Payment: Evidence from a Field Experiment in Indonesia By Eko Arief Yogama; Daniel J. Gray; Matthew D. Rablen
  4. Truth-Telling in a Sender-Receiver Game : Social Value Orientation and Incentives By Hanshu Zhang; Frederic Moisan; Palvi Aggarwal; Cleotilde Gonzalez
  5. Saving behaviors of private households under varying tariff structures, price levels and incentives - Experimental evidence By Harpenau, Franziska; Magalhaes, Katrin Marques; Steffen, Nico; Wiewiorra, Lukas
  6. From Gridlock to Polarization By Marc S. Jacob; Barton E. Lee; Gabriele Gratton
  7. Do We Talk Too Much? By Emanuel Vespa; Georg Weizsäcker
  8. Are Women Less Effective Leaders than Men? Evidence from Experiments Using Coordination Games By Lea Heursen; Eva Ranehill; Roberto Weber
  9. Human Capital Affects Religious Identity: Causal Evidence from Kenya By Livia Alfonsi; Michal Bauer; Julie Chytilová; Edward Miguel
  10. Narrative Persuasion By Kai Barron; Tilman Fries
  11. Gender gaps in financial literacy: a multi-arm RCT to break the response bias in surveys By Laura Hospido; Nagore Iriberri; Margarita Machelett
  12. How cognitive skills affect strategic behavior: Cognitive ability, fluid intelligence and judgment By David Gill; Zachary Knepper; Victoria Prowse; Junya Zhou
  13. Women’s Work, Social Norms and the Marriage Market∗ By Farzana Afridi; Abhishek Arora; Diva Dhar; Kanika Mahajan
  14. Motivated Procrastination By Charlotte Cordes; Jana Friedrichsen; Simeon Schudy
  15. The Effects of Interest Rate Increases on Consumers' Inflation Expectations: The Roles of Informedness and Compliance By Edward S. Knotek; James Mitchell; Mathieu Pedemonte; Taylor Shiroff
  16. Lifetime Memories of Inflation: Evidence from Surveys and the Lab By Isabelle Salle; Yuriy Gorodnichenko; Olivier Coibion
  17. Public Appeals and Collective Crisis Mitigation By Peter Haan; Lea Heursen; Jule Specht; Bruno Veltri; Georg Weizsäcker
  18. Spillover effects of competition outcome on future risky cooperation By Yansong Li; Zhenliang Liu; Yuqian Wang; Edmund Derrington; Frederic Moisan; Jean-Claude Dreher
  19. Twitter Permeability to financial events: an experiment towards a model for sensing irregularities By Ana Fern\'andez Vilas; Rebeca P. D\'iaz Redondo; Keeley Crockett; Majdi Owda; Lewis Evans
  20. Attempting to Detect a Lie: Do We Think it Through? By Iuliia Grabova; Hedda Nielsen; Georg Weizsäcker

  1. By: Hunold, Matthias; Werner, Tobias
    Abstract: This paper investigates the collusive and competitive effects of algorithmic price recommendations on market outcomes. These recommendations are often non-binding and common in many markets, especially on online platforms. We develop a theoretical framework and derive two algorithms that recommend collusive pricing strategies. Utilizing a laboratory experiment, we find that sellers condition their prices on the recommendation of the algorithms. The algorithm with a soft punishment strategy lowers market prices and has a pro-competitive effect. The algorithm that recommends a subgame perfect equilibrium strategy increases the range of market outcomes, including more collusive ones. Variations in economic preferences lead to heterogeneous treatment effects and explain the results.
    Keywords: Collusion, Experiment, Human-Machine Interaction, Bertrand Oligopoly
    JEL: C92 D43 L13 L41
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:zbw:dicedp:280937&r=exp
  2. By: Timmons, Shane; Whelan, Ava; Kelly, Clare
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:esr:wpaper:wp760&r=exp
  3. By: Eko Arief Yogama; Daniel J. Gray; Matthew D. Rablen
    Abstract: We conducted a randomised controlled trial in Indonesia to evaluate the effect of three intervention letters on tax penalty compliance behaviour. Over 10, 000 individual taxpayers are randomly assigned to receive either a deterrence, information, or simplification letter, or no letter. Our results indicate that simplification, which makes paying a penalty less burdensome administratively by providing billing codes to pay the penalties, yields the highest probability of timely settlement, increasing compliance by 32 per cent compared to the control group. Deterrence also positively impacts penalty compliance, increasing timely settlement rates by 27 per cent. The least effective intervention is the information letter. Although associated with a 12 per cent increase in tax compliance, this effect is only statistically significant at the 10 per cent confidence level. Our results suggest that strategic messaging by tax authorities in developing countries can be a cost-effective tool for improving tax penalty payment compliance.
    Keywords: tax penalties, tax compliance, RCT, simplification, deterrence, information, Indonesia
    JEL: C93 D91 H26 Z18
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_10836&r=exp
  4. By: Hanshu Zhang; Frederic Moisan (EM - emlyon business school); Palvi Aggarwal; Cleotilde Gonzalez
    Abstract: Previous research has discussed the effects of monetary incentives and prosociality on deceptive behavior. However, research has not comprehensively investigated the relationship between these two factors. In the current research, we introduce a repeated two-player sender–receiver binary choice task, where players in the role of senders or receivers receive asymmetric information regarding payoffs, offering the opportunity to explore the effects of economic incentives to lie according to the players' prosociality. In Experiment 1, players are paired to play the game as a sender or receiver online. We find that economic incentives determine the likelihood of deception from senders and the likelihood that receivers will deviate from the received suggestions. Moreover, prosociality is related to players' behavior: Prosocial senders send less deceptive messages and prosocial receivers choose options that benefit senders more. Furthermore, senders display consistent behavior when interacting with receivers, and they do not change their deceptive behavior even if detected by receivers. Experiment 2 further investigates how the players' behavior corresponds to their understanding and interpretation of the other players' actions, by pairing players with computer algorithms that display consistent probabilistic behaviors. We observe that senders deceive receiver algorithms by sending truthful messages when they expect the message not to be followed, and receivers follow the received messages by choosing the option that benefits "honest" sender algorithms. While we find a consistent result that prosocial senders send fewer deceptive messages than they should when telling the truth is costly, prosocial receivers are less considerate of sender payoffs in algorithms' interaction.
    Keywords: Deception, Sender-receiver game, Social preferences, Social value orientation, Human machine interaction
    Date: 2022–08–01
    URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-04325602&r=exp
  5. By: Harpenau, Franziska; Magalhaes, Katrin Marques; Steffen, Nico; Wiewiorra, Lukas
    Abstract: More efficient and sustainable energy consumption behaviors are crucial to mitigate the adverse effects of climate change. This paper examines how dynamic personal pricing and externality cost incentives interact and affect energy conservation behaviors. We conduct an online lab experiment in which participants complete real-effort tasks under different cost schemes. Increasing personal costs that reduce individual bonuses, significantly decreases participants' energy usage, although it requires more effort in the form of additional time. However, emphasizing increases in externality costs, representing environmental damage through reduced donations, does not impact performance. This suggests that the introduction of such prosocial incentives matters more than their magnitude. While environmental attitudes predict baseline usage, they do not change marginal responses to cost changes. Our results provide novel evidence on the motivational nuances underlying energy conservation and have key implications for policies considering a combination of incentives.
    Abstract: Ein effizientes und nachhaltiges Energiesparverhalten ist von zentraler Bedeutung, um die negativen Auswirkungen des Klimawandels abzumildern. In diesem Beitrag wird untersucht, wie dynamische Anreize von Preisen und Externalitäten zusammenwirken und das Energiesparverhalten beeinflussen. Wir nutzen ein Online-Laborexperiment, bei dem die Teilnehmenden "Real-effort" Aufgaben unter verschiedenen Kostenstrukturen lösen. Eine Erhöhung der Kosten, welche individuelle Boni reduzieren, führt zu einem signifikanten Rückgang des Energieverbrauchs der Teilnehmenden, was aber mehr Aufwand in Form von zusätzlicher Zeit erfordert. Allerdings hat die Kommunikation steigender Externalitätskosten - die eine Spende verringern und Umweltschäden simulieren - keine Auswirkungen auf das Verhalten im Experiment. Dies deutet darauf hin, dass die Einführung solcher prosozialer Anreize wichtiger ist als deren Höhe. Während umweltfreundliche Einstellungen den grundsätzlichen Energieverbrauch beeinflussen, ändern sie hier nicht die marginalen Reaktionen auf Kostenänderungen.
    Keywords: Energy consumption, Energy conservation, Behavioral, Environment
    JEL: Q41 Q56 D91
    Date: 2023
    URL: http://d.repec.org/n?u=RePEc:zbw:wikwps:280956&r=exp
  6. By: Marc S. Jacob (ETH Zurich); Barton E. Lee (ETH Zurich); Gabriele Gratton (UNSW Business School)
    Abstract: We propose a mechanism linking legislative gridlock to voters’ support for candidates who hold extreme policy positions. Moderate voters rationally discount extreme policy proposals from co-partisans on gridlocked policy issues because on these issues policy change is unlikely. We test our mechanism in a large-scale online experiment in which we randomly vary subjects’ perceptions of gridlock and measure subjects’ support for co-partisan candidates in candidate-choice tasks. We verify that greater perception of gridlock increases moderate subjects’ propensity to vote for extreme co-partisan candidates. We show that our experimental evidence is consistent with our mechanism and that other mechanisms are less likely to underlie our main result. Our theory offers a causal connection from gridlock to elite polarization that may inform further empirical work and suggests a novel tradeoff between elite polarization and policy stability in constitutional design.
    Date: 2023–07
    URL: http://d.repec.org/n?u=RePEc:swe:wpaper:2023-11&r=exp
  7. By: Emanuel Vespa (UC San Diego); Georg Weizsäcker (HU Berlin)
    Abstract: We consider the trade-off between talking and listening in a laboratory experiment where two team members need to coordinate on the use of an information channel. Each team member indicates their preference to “talk” and share her own information with her teammate, or to “listen” and obtain knowledge of the teammate’s information. The nature of the information varies across treatments. For stylized urns-and-balls treatments, we formalize a version of the “hard-easy effect” of over- and under-confidence: players talk more in situations where information is relatively precise – not only for the talker but also for the listener. Indeed we find that a more precise information structure induces a higher talking frequency, with a difference of 5 percentage points, relative to a baseline of 48 percent. The game-theoretic equilibrium, with rational expectations, predicts no such treatment effect. In treatments where information arises from real-world contexts, the hard-easy effect on the talking frequency is even stronger, at about 13 percentage points, relative to a baseline of about 38 percent.
    Date: 2023–12–13
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:479&r=exp
  8. By: Lea Heursen (HU Berlin); Eva Ranehill (University of Gothenburg, Lund University); Roberto Weber (University of Zurich)
    Abstract: We study whether one reason behind female underrepresentation in leadership is that female leaders are less effective at coordinating followers’ actions. Two experiments using coordination games investigate whether female leaders are less successful than males in persuading followers to coordinate on efficient equilibria. In these settings, successful coordination hinges on higher-order beliefs about the leader’s capacity to convince followers to pursue desired actions, making beliefs that women are less effective leaders potentially self-confirming. We find no evidence that such bias impacts actual leadership performance, precisely estimating the absence of a gender leadership gap. We further show that this result is surprising given experts’ priors.
    Keywords: gender; coordination games; leadership; experiment;
    JEL: D23 C72 C92 J1
    Date: 2023–12–05
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:472&r=exp
  9. By: Livia Alfonsi; Michal Bauer; Julie Chytilová; Edward Miguel
    Abstract: We study how human capital and economic conditions causally affect the choice of religious denomination. We utilize a longitudinal dataset monitoring the religious history of more than 5, 000 Kenyans over twenty years, in tandem with a randomized experiment (deworming) that has exogenously boosted education and living standards. The main finding is that the program reduces the likelihood of membership in a Pentecostal denomination up to 20 years later when respondents are in their mid-thirties, while there is a comparable increase in membership in traditional Christian denominations. The effect is concentrated and statistically significant among a sub-group of participants who benefited most from the program in terms of increased education and income. The effects are unlikely due to increased secularization, because the program does not reduce measures of religiosity. The results help explain why the global growth of the Pentecostal movement, sometimes described a “New Reformation”, is centered in low-income communities.
    JEL: C93 O12 Z12
    Date: 2023–11
    URL: http://d.repec.org/n?u=RePEc:cer:papers:wp767&r=exp
  10. By: Kai Barron (WZB Berlin); Tilman Fries (LMU Munich)
    Abstract: Modern life offers nearly unbridled access to information; it is the harnessing of this information to guide decision-making that presents a challenge. We study how one individual may try to shape the way another person interprets objective information by proposing a causal explanation (or narrative) that makes sense of this objective information. Using an experiment, we examine the use of narratives as a persuasive tool in the context of financial advice where advisors may hold incentives that differ from those of the individuals they are advising. Our results reveal several insights about the underlying mechanisms that govern narrative persuasion. First, we show that advisors construct self-interested narratives and make them persuasive by tailoring them to fit the objective information. Second, we demonstrate that advisors are able to shift investors’ beliefs about the future performance of a company. Third, we identify the types of narratives that investors find convincing, namely those that fit the objective information well. Finally, we evaluate the efficacy of several potential policy interventions aimed at protecting investors. We find that narrative persuasion is difficult to protect against.
    Keywords: narratives; beliefs; financial advice; conflicts of interest; behavioral finance;
    JEL: D83 G40 G50 C90
    Date: 2023–12–09
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:469&r=exp
  11. By: Laura Hospido (Banco de España); Nagore Iriberri (Banco de España); Margarita Machelett (Banco de España)
    Abstract: Gender gaps in ?nancial literacy are pervasive and persistent. While most studies explore why women know less, these gaps might also re?ect differential behavior in providing responses in surveys. Women might be more likely to be uncertain, or men might be more likely to choose an answer when uncertain, while women might tend to opt for “I do not know”, leading to imprecise measures of the gender gap in ?nancial literacy. We test for the effectiveness of three interventions to reduce the frequency of “I do not know”, in a randomized control trial online survey administered to 6, 000 participants. The standard survey, our control group, includes the possibility of answering “I do not know”. The three treatment arms exclude the “I do not know” answer, offer incentives for correct answers or inform survey takers of the existing gender gap in choosing “I do not know”. All interventions are very effective in reducing the frequency of “I do not know”. The information is most effective for women, while the incentives are most effective for men. As regards gender gaps, only the provision of information significantly reduces the gender gap in choosing “I do not know”, as well as the gender gap in ?nancial literacy.
    Keywords: financial literacy, gender gaps, survey methods
    JEL: K32 Q5 O13 O44
    Date: 2024–01
    URL: http://d.repec.org/n?u=RePEc:bde:wpaper:2401&r=exp
  12. By: David Gill; Zachary Knepper; Victoria Prowse; Junya Zhou
    Abstract: We explore the influence of cognitive ability and judgment on strategic behavior in the beauty contest game. Using the level-k model of bounded rationality, cognitive ability and judgment both predict higher level strategic thinking. However, individuals with better judgment choose the Nash equilibrium action less frequently, and we uncover a novel dynamic mechanism that sheds light on this pattern. Taken together, our results indicate that fluid (i.e., analytical) intelligence is a primary driver of strategic level-k thinking, while facets of judgment that are distinct from fluid intelligence drive the lower inclination of high judgment individuals to choose the equilibrium action.
    Keywords: cognitive ability; judgment; fluid intelligence; matrix reasoning; beauty contest; strategic sophistication; level-k; experiment; game theory
    JEL: C92 C72 D91
    Date: 2023–11
    URL: http://d.repec.org/n?u=RePEc:pur:prukra:1337&r=exp
  13. By: Farzana Afridi (Indian Statistical Institute and IZA); Abhishek Arora (Harvard University); Diva Dhar (University of Oxford); Kanika Mahajan (Ashoka University)
    Abstract: While it is well-acknowledged that the gendered division of labor within marriage adversely affects women’s allocation of time to market work, there is less evidence on how extant social norms can influence women’s work choices pre-marriage. We conduct an experiment on an online marriage market platform that allows us to measure preferences of individuals in partner selection in India. We find that employed women are 14.5% less likely to receive interest from male suitors relative to women who are not working. In addition, women employed in ‘masculine’ occupations are 3.2% less likely to elicit interest from suitors relative to those in ‘feminine’ occupations. Our results highlight the strong effect of gender norms and patriarchy on marital preferences, especially for men hailing from higher castes and northern India, where communities have more traditional gender norms. These findings suggest that expectations regarding returns in the marriage market may influence women’s labor market participation and the nature of market work.
    Keywords: Gender; India; Social norms; Work choices; Marriage market
    Date: 2023–02–14
    URL: http://d.repec.org/n?u=RePEc:ash:wpaper:94&r=exp
  14. By: Charlotte Cordes (LMU Munich); Jana Friedrichsen (Kiel University, CESifo); Simeon Schudy (Ulm University, CESifo)
    Abstract: Traditionally, economic models have attributed procrastination to present bias. However, procrastination may also arise when individuals derive anticipatory utility from holding motivated, overly optimistic beliefs about the workload they need to complete. This study provides a rigorous empirical test for this notion of `motivated procrastination'. In a longitudinal experiment over four weeks, individuals have to complete a cumbersome task of unknown length. They are exposed to exogenous variation in i) their expectation regarding their workload and ii) scope for motivated reasoning. We find that scope for motivated reasoning allows workers to hold substantially more optimistic beliefs and identify a causal link between the exogenous variation in beliefs and the deferral of work to the future. This systematic belief-based delay of work (motivated procrastination) turns out to be robust to accounting for decision-makers' time preferences and emotional responses, and looms largest for decision makers who tend to not acquire information that may include negative news.
    Keywords: anticipatory utility; beliefs; memory; motivated cognition; procrastination; real effort; task allocation;
    JEL: C91 D83 D84 D90 D91
    Date: 2023–12–03
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:471&r=exp
  15. By: Edward S. Knotek; James Mitchell; Mathieu Pedemonte; Taylor Shiroff
    Abstract: We study how monetary policy communications associated with increasing the federal funds rate causally affect consumers' inflation expectations. In a large-scale, multi-wave randomized controlled trial (RCT), we find weak evidence on average that communicating policy changes lowers consumers' medium-term inflation expectations. However, information differs systematically across demographic groups, in terms of ex ante informedness about monetary policy and ex post compliance with the information treatment. Monetary policy communications have a much stronger effect on people who had not previously heard news about monetary policy and who take sufficient time to read the treatment, implying scope to increase the impact of communications by targeting specific groups of the general public. Our findings show that, in an inflationary environment, consumers expect that raising interest rates will lower inflation. More generally, our results emphasize the importance of measuring both respondents' information sets and their compliance with treatment when using RCTs in empirical macroeconomics, to better understand the well-documented evidence of heterogeneous treatment effects.
    Keywords: expectations formation; policy communication; monetary policy; inflation; surveys
    JEL: E31 E52 E58
    Date: 2024–01–03
    URL: http://d.repec.org/n?u=RePEc:fip:fedcwq:97534&r=exp
  16. By: Isabelle Salle; Yuriy Gorodnichenko; Olivier Coibion
    Abstract: We study how individuals’ memories of inflation shape their expectations about future inflation using both surveys and laboratory experiments. Recalling having lived through prior disinflations has pronounced effects on how long-lived people expect the current inflation episode to last. Information treatments in which we show people prior disinflationary experiences similarly strongly reduce inflation expectations of individuals on average and are often recalled as inflation memories months later. We also show that when people try to forecast inflation in the lab, the inflation dynamics in the game can affect their beliefs much like the inflation experienced in real life. Methodologically, we compare and contrast surveys and lab experiments and discuss the pros and cons of each method, emphasizing the general consistency across the two methodologies.
    JEL: E03 E4 E5 E7
    Date: 2023–12
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:31996&r=exp
  17. By: Peter Haan (DIW Berlin, FU Berlin); Lea Heursen (HU Berlin); Jule Specht (HU Berlin); Bruno Veltri (HU Berlin); Georg Weizsäcker (HU Berlin)
    Abstract: Arrivals of crises often trigger public appeals by policy leaders, attempting to motivate crisis-mitigating behaviors. We run a controlled experiment among a general-population sample to investigate the impact of such appeals and of their tonality. Varying the language, an identical content of the appeal—a plea to contribute to mitigating a crisis—is formulated with either positive or negative wordings. Relative to the case with no appeal, both types of appeals successfully raise contributions, each by about 20 percent. A separate sample of policy-makers is presented with our design and asked to estimate the effect of the appeals. They correctly predict the effect of the positively worded appeal but fail to predict the effect of the negatively worded one.
    Date: 2023–12–13
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:478&r=exp
  18. By: Yansong Li; Zhenliang Liu; Yuqian Wang; Edmund Derrington; Frederic Moisan (EM - emlyon business school); Jean-Claude Dreher
    Abstract: "There is growing evidence that risky cooperation is regulated by the experience of previous interactions with others. However, it is unclear how the evaluation of outcomes from competitive interactions can affect individuals' subsequent cooperative behavior. To address this issue, we examined how participants cooperated with a partner having just competed with them. While competing, participants (N = 164) were randomly assigned to receive one of four types of outcome feedback regarding their performance (victory vs. defeat vs. uncertain vs. no competition (control)). We found that both the experience of defeats and of uncertainty as competitive outcomes exerted a negative impact on the extent to which participants then engaged in cooperative behavior with their recent opponents. This only occurred when such subsequent cooperative behavior involved a high potential for incurring personal costs but not when there was no risk of incurring personal costs and a positive return. Finally, mediation analysis revealed that the effect of defeat was mediated by participants' level of interpersonal trust and the extent to which participants were willing to cooperate, while the effect of the uncertain competitive outcome was mediated only by the extent to which participants were willing to cooperate. These findings offer novel insights into how risky cooperation is modulated by previous competition."
    Date: 2023–04–04
    URL: http://d.repec.org/n?u=RePEc:hal:journl:hal-04325682&r=exp
  19. By: Ana Fern\'andez Vilas; Rebeca P. D\'iaz Redondo; Keeley Crockett; Majdi Owda; Lewis Evans
    Abstract: There is a general consensus of the good sensing and novelty characteristics of Twitter as an information media for the complex financial market. This paper investigates the permeability of Twittersphere, the total universe of Twitter users and their habits, towards relevant events in the financial market. Analysis shows that a general purpose social media is permeable to financial-specific events and establishes Twitter as a relevant feeder for taking decisions regarding the financial market and event fraudulent activities in that market. However, the provenance of contributions, their different levels of credibility and quality and even the purpose or intention behind them should to be considered and carefully contemplated if Twitter is used as a single source for decision taking. With the overall aim of this research, to deploy an architecture for real-time monitoring of irregularities in the financial market, this paper conducts a series of experiments on the level of permeability and the permeable features of Twitter in the event of one of these irregularities. To be precise, Twitter data is collected concerning an event comprising of a specific financial action on the 27th January 2017:{~ }the announcement about the merge of two companies Tesco PLC and Booker Group PLC, listed in the main market of the London Stock Exchange (LSE), to create the UK's Leading Food Business. The experiment attempts to answer five key research questions which aim to characterize the features of Twitter permeability to the financial market. The experimental results confirm that a far-impacting financial event, such as the merger considered, caused apparent disturbances in all the features considered, that is, information volume, content and sentiment as well as geographical provenance. Analysis shows that despite, Twitter not being a specific financial forum, it is permeable to financial events.
    Date: 2023–12
    URL: http://d.repec.org/n?u=RePEc:arx:papers:2312.11530&r=exp
  20. By: Iuliia Grabova (HU Berlin, DIW Berlin); Hedda Nielsen (HU Berlin); Georg Weizsäcker (HU Berlin)
    Abstract: Game-theoretic analyses of communication rely on beliefs – especially, the receiver’s belief about the truth status of an utterance and the sender’s belief about the reaction to the utterance – but research that provides measurements of such beliefs is still in its infancy. Our experiment examines the use of second-order beliefs, measuring belief hierarchies regarding a message that may be a lie. In a two-player communication game between a sender and a receiver, the sender knows the state of the world and has a transparent incentive to deceive the receiver. The receiver chooses a binary reaction. For a wide set of non-equilibrium beliefs, the reaction and the receiver’s second-order belief should dissonate: she should follow the sender’s statement if and only if she believes that the sender believes that she does not follow the statement. The opposite is true empirically, constituting a new pattern of inconsistency between actions and beliefs.
    Keywords: strategic information transmission; lying; higher-order beliefs;
    JEL: D01 D83
    Date: 2023–12–13
    URL: http://d.repec.org/n?u=RePEc:rco:dpaper:477&r=exp

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