Seminar with Martin Dufwenberg - Cheating with Externalities and a Regular Audience

Seminars - Theory and Experiments Seminar Series
(joint with Department of Economics)
Speakers
Martin Dufwenberg, Bocconi University
Max-0062

Reporting private information is common, and dishonest reporting often imposes costs or benefits on others. We study how such externalities influence cheating behavior. In a laboratory experiment based on the die-roll paradigm of Fischbacher and Föllmi-Heusi (2013), we introduce a “regular audience” whose payoff depends on the reporter’s self-report. We systematically vary the externality by assigning the audience a payoff that is negatively, neutrally, or positively related to the report. We also manipulate whether the experimenter observes the private draw. This design addresses three open questions: (1) whether externalities influence dishonesty, (2) whether the experimenter could be disregarded as a relevant audience, and (3) enabling a direct comparison of competing theories of social image concerns (in particular, comparing the sailing-to-ceiling equilibrium of Dufwenberg & Dufwenberg (2018, JET) to the cutoff-value reporting patterns predicted by Gneezy, Kajackaite & Sobel (2018, AER) and Khalmetski & Sliwka (2019, AEJ:Mi).