Lying and Incentives

Question 1

Deception Definition

Answer 1

An attempt to mislead somebody else by (not) transferring information, hiding or partially revealing it. Framing statements to guid away from the truth.

Question 2

Lying Definition

Answer 2

An attempt to mislead somebody else by transferring information that you know (or think) is false.

Question 3

Ethical Reflection on Deception

Answer 3

Teleological Approach: act utilitarians calculate the total happiness, depends on the situation, whether deception is good or bad.
Rule utilitarians look at utility of consequences, if everyone deceives, there will be chaos and anarchy as the consequence.
Deontological Approach: if everyone deceives, we would lose our confidence in verbal commitments.
Virtue ethics: habitual lying might become second nature, driving out such virtues as truthfulness.

Question 4

Influencing Factors of Lies

Answer 4

Lying depends on…

• the consequences,
• the kind of interaction both in past and future
• depends on the sender of the lie
• on the communicational protocol
• on the characteristics of the lie, i.e. subject, size, cost

Question 5

Consequences as Influencing Factor of Lying

Answer 5

• a homo oeconomicus calculated probability & magnitude of punishment of getting caught by lying and compares it to the expected profit from either lying or truth telling.
  Conclusion: external incentives influence lying. Changing the supervision and magnitude of punishment could change lying behavior

Question 6

Four Categories of lies according to Consequences

(Gneezy& Erat 2012)

Answer 6

• pareto white lies (lies that benefit the sender AND the receiver)
• altruistic white lies (lies that harm the receiver, e..g efficiency concerns)
• lies that harm the sender and the receiver, e.g. spiteful reaction to unfair behavior
• lies that benefit the sender and har, the receiver e.g. selfish black lies

Question 7

Kind of Interaction influencing Lying

Answer 7

• lying depends on the past, i.e. previous history of interaction (can be used as punishment)
• and depends on future, e.g. expectation of future interaction determines the size of lies, probability of detection affects amount of lies

Question 8

Lying depends on the sender of the lie

Answer 8

• Different motivations, e.g. to increase monetary payoff for others
• or to protect others from the truth
• Degree of guilt aversion: some people are sensitive to others’ expectations, e.g. not living up to expectations of receiver makes sender suffer. Or the sender’s promises affect the receiver’s belief about the sender. (Or what the sender thinks the receiver will belief about him)

Question 9

Lying depends on the type of communication

Answer 9

less lies with free-format communication, but people expect others to lie more.
Medium used for communication affects frequency of lying, e.g. >50% of people lie via phone, >30% via writing, 7% face to face

Question 10

Lying depends on the characteristics of the lie

Answer 10

1) topic: people lie less about their future actions than about things they know or actions occurred in the past
2) size of the lie: - some believe that there are degrees in size of lies.
- aversion to lying increases with the size of the lie
- frequency of lies, some people balance lies and truths when using multiple messages
3) Cost of lie:
- cost of consequences, effort cost of telling lies,
guilt-aversion
- disutility from a false promise