representative evidence on lying costs abstract a central assumption in economics is that people misreport their private information if this is to their material benefit several recent models depart from this assumption and posit that some people do not lie or at least do not lie maximally these models invoke many different underlying motives including intrinsic lying costs altruism efficiency concerns or conditional cooperation to provide an empirically validated microfoundation for these models it is crucial to understand the relevance of the different potential motives we measure the extent of lying costs among a representative sample of the german population by calling them at home in our setup participants have a clear monetary incentive to misreport misreporting cannot be detected reputational concerns are negligible and altruism efficiency concerns or conditional cooperation cannot play a role yet we find that aggregate reporting behavior is close to the expected truthful distribution suggesting that lying costs are large and widespread further lab experiments show that this result is not driven by the mode of communication

the wages of dishonesty the supply of cheating under high powered incentives we use a novel design to identify how dishonesty changes through a broad reward range that at the high end exceeds participants average daily wages using a sample of online indian workers who earn bonuses based on six simultaneous coin flips we show that the relationship between dishonesty and financial rewards depends on the incentive range we find two novel effects as incentives exceed those used in most prior research first dishonesty increases and reaches its maximum as rewards increase from 0 50 to 3 per reported head and as earnings reach 15 indicating that rewards can indeed motivate more cheating when large enough more importantly we show that dishonesty declines at the highest reward levels up to 5 per head as individuals appear to engage in lower magnitudes of dishonesty we detail how our results could be explained by a reference dependent utility with internal costs of dishonesty that are convex in the magnitude of the lie and show survey and simulation based evidence that support this explanation

the role of lawyer legislators in shaping the law evidence from voting on tort reforms abstractattorneys elected to the us congress and to state legislatures are systematically less likely to vote in favor of tort reforms that restrict tort litigation but more likely to support bills that extend tort law than are legislators with different professional backgrounds this finding is based on the analysis of 64 roll call votes at the federal and state levels between 1995 and 2014 it holds when controlling for legislators ideology and is particularly strong for term limited lawyer legislators the empirical regularity is consistent with the hypothesis that lawyer legislators at least in part pursue their private interests when voting on tort issues our results highlight the relevance of legislators identities and individual professional interests for economic policy making

symposium on the economics of liability son s liability is another s asset hence with every complaint that the u s liability system is imposing a crippling tax on suppliers of risky goods and services there also comes a cry that liability is essential to compensate the victims of accidents widespread visible concern about the liability crisis reached a peak during the mid 1980s without question there was a proliferation of lawsuits by those asserting their rights to recover for damages caused by others malpractice pollution defective products and so on with a consequent restructuring of economic activity as several of the authors in this symposium point out liability insurance premiums skyrocketed even as insurance coverage was reduced many people saw public parks and swimming pools closed for lack of liability insurance coverage less visible were the many decisions continuing to this day to withdraw products or set aside possible new products for fear of liability exposure while liability receives less press attention now than several years ago it remains an area that many suspect is sorely in need of reform and where economists have much to contribute the legal scope of liability has expanded markedly during the past 30 years raising the question of whether liability has become overly broad there are some signs that the pendulum is starting to swing the other way reducing the scope and expense of liability some states have imposed caps on punitive damages or have abolished joint and several liability which makes each defendant in a liability action potentially liable for the entire damages at the

honest on mondays honesty and the temporal separation between decisions and payoffs abstract we show that temporally distancing the decision task from the payment of the reward increases honest behavior each of 427 israeli soldiers fulfilling their mandatory military service rolled a six sided die in private and reported the outcome to the unit s cadet coordinator for every point reported the soldier received an additional half hour early release from the army base on thursday afternoon soldiers who participated on sunday the first work day of the week are significantly more honest than those who participated later in the week we derive practical implications for eliciting honesty

selection tournaments and dishonesty we conduct a real effort experiment in which performance is not monitored and participants are paid according to their reported performance participants are paid according to a piece rate and a winner take all tournament and then select between the two schemes before performing the task one more time competition increases dishonesty and lowers output when the payment scheme is exogenously determined participants with a higher propensity to be dishonest are more likely to select into competition however after selection we find no output difference between piece rate and tournament this is attributable to a handful of honest individuals who select competition

loss aversion and lying behavior abstract we theoretically show that loss averse agents are more likely to lie to avoid receiving a low payoff after a random draw the lower the ex ante probability of this bad outcome the ex ante expected payoff increases as the bad outcome becomes less likely and hence the greater is the loss avoided by lying we demonstrate robust support for this theory by reanalyzing the results from the extant literature and with a new experiment that varies the outcome probabilities and is run double anonymous

the political economy of product liability reform the present body of product liability rules has been fashioned by common law judges with an occasional assist from legislatures the key premise of the present system is that freedom of contact even subject to the usual caveats of force and misrepresentation has no place to play within the product liability system that assumption makes good sense in the few cases in which defective products are responsible for injuries to bystanders but it is far more dubious when suits are brought by injured product purchasers or users to be sure there is typically no direct contract link between the manufacturer and ultimate purchaser the absence of explicit contracts however is itself a reflection of the present body of legal rules that regulate product use these rules refuse to enforce a limitation on liability or damages created by contract and occasionally impose punitive damages on firms bold enough to seek contractual protection if the law were otherwise then a manufacturer could and would designate a retailer as his agent so as to secure a direct contract with a purchaser and where possible a product user contractual quiescence today is not a sign of satisfaction with the legal rules as ideal default provisions nor is it evidence that transactions costs are so high that voluntary agreements cannot be formed it is only proof that any effort to contract out of the present tort system has been effectively blocked by the judges and legislatures who have created the modern law the present regime of legal rules has powerful social consequences the conventional economic assumption is that rational self interested parties only enter into contracts that ex ante assure them of some joint gain by that standard the present system of public regulation of contract terms whether by common law decisions or statute imposes significant losses on both sides legislation to remore these barriers to private contract could generate some substantial overall gains whenever legislation could generate some allocative improvement it should be possible to divide the gains thereby generated to leave all interested parties better off than before if the costs of passing legislation and dividing the gains were zero then inefficient substantive rules would never remain on the public books today s product liability rules do not fade but grow stronger with each passing year the remainder of this paper helps to explain why this trend is likely to continue the barriers to needed legislative reforms are simply too great

the spillover effects of affirmative action on competitiveness and unethical behavior we conduct an artefactual field experiment to examine various spillover effects of affirmative action policies in the context of castes in india we test a if individuals who enter tournaments in the presence of affirmative action policies remain competitive after the policy has been removed and b whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy we find that these policies substantially increase the confidence and the competitiveness of the backward caste members however we find no spillover effect on confidence and competitiveness once affirmative action is withdrawn any gain in competitiveness due to the policy is then entirely wiped out furthermore the strong existing bias of the dominant category against the backward category is not significantly aggravated by affirmative action except when individuals learn that they have lost the previous competition

do cheaters in the lab also cheat in the field in this paper we study the correlation between cheating in the lab and cheating in the field we conduct a laboratory experiment using a variant of the mind game jiang 2013 payoffs above a certain threshold are indicative of cheating behavior subjects are paid their earnings by bank transfer a fraction of the subjects is deliberately paid more than their earnings we send subjects a reminder e mail stating their earnings and asking them if they have received their payment we find a significant correlation of 0 31 between cheating in the lab and in the field subjects with higher payoffs in the mind game are also less likely to report the overpayment our results speak to the lab field generalizability of cheating behavior

tax me if you can an artifactual field experiment on dishonesty in this paper we test whether increased salience of a tax charge increases dishonesty using a version of the die under cup paradigm participants earn money in proportion to the outcome reported and thus have an incentive to over report we find a significant increase in high outcomes in the presence of a tax frame suggesting that participants use the tax as an excuse to rationalize their dishonest act in addition we tested whether adding an explanation for the adoption of the tax would increase honesty we find evidence for reversed dishonesty with participants reporting significantly more low outcomes these results warn policy makers about the non trivial relationship between taxation charges and dishonesty

context dependent cheating experimental evidence from 16 countries policy makers use several international indices that characterize countries according to the quality of their institutions however no effort has been made to study how the honesty of citizens varies across countries this paper explores the honesty among citizens across 16 countries with 1440 participants we employ a very simple task where participants face a trade off between the joy of eating a fine chocolate and the disutility of having a threatened self concept because of lying despite the incentives to cheat we find that individuals are mostly honest further international indices that are indicative of institutional honesty are completely uncorrelated with citizens honesty for our sample countries

credit constraints and growth in a global economy we show that in an open economy olg model the interaction between growth differentials and household credit constraints more severe in fast growing countries can explain three prominent global trends a divergence in private saving rates between advanced and emerging economies large net capital outflows from the latter and a sustained decline in the world interest rate micro level evidence on the evolution of age saving profiles in the u s and china corroborates our mechanism quantitatively our model explains about 40 percent of the divergence in aggregate saving rates and a significant portion of the variations in age saving profiles across countries and over time

how do senators vote disentangling the role of voter preferences party affiliation and senate ideology this paper develops a methodology for consistently estimating the relative weights in senator utility functions despite the fact that senator ideologies are unobserved the empirical results suggest that voter preferences are assigned only one quarter of the weight in senator utility functions the national party line also has some influence but the senator s own ideology is the primary determinant of roll call voting patterns these results cast doubt on the empirical relevance of the median voter theorem estimation of the model requires only roll call voting data making it widely applicable copyright 1996 by american economic association

incentives and cheating abstract we study how cheating behavior is affected by incentives after replicating the finding in the cheating game literature that lying does not increase with incentives we show that this insensitivity is not a characteristic of the intrinsic lying cost but rather a result of concern about being exposed as a liar in a modified mind game in which this concern is eliminated we find that people lie more and in particular lie more when the incentives to do so increase thus our results show that for many participants the decision to lie follows a simple cost benefit analysis they compare the intrinsic cost of lying with the incentives to lie once the incentives are higher than the cost they switch from telling the truth to lying

why do we lie a practical guide to the dishonesty literature over the last decade a massive body of research has been devoted to uncovering human dishonesty in the present paper we review more than a hundred papers from this literature and provide a comprehensive overview by first listing the existing theoretical frameworks and then covering the common empirical approaches synthesizing the demographic and personal characteristics of those who cheat identifying the behavioural mechanisms found that affect dishonesty and finally we finish by discussing how the empirical evidence fit theory overall the review concludes that many people behave dishonestly but also that it is a highly malleable behavior sensitive to elements such as decision contexts behaviour of others state of mind and depletion the review can be used as an overview of the dishonesty literature or as a guide or work of reference for selected topics of interest

honesty beliefs about honesty and economic growth in 15 countries the honesty of people in an online panel from 15 countries was measured in two experiments reporting a coin flip with a reward for heads and an online quiz with the possibility of cheating there are large differences in honesty across countries average honesty is positively correlated with per capita gdp this is driven mostly by gdp differences arising before 1950 rather than by gdp growth since 1950 a country s average honesty correlates with the proportion of its population that is protestant these facts suggest a long run relationship between honesty and economic development the experiment also elicited participants expectations about different countries levels of honesty expectations were not correlated with reality instead they appear to be driven by cognitive biases including self projection

loss aversion under prospect theory a parameter free measurement agrowing body of qualitative evidence shows that loss aversion a phenomenon formalized in prospect theory can explain a variety of field and experimental data quantifications of loss aversion are however hindered by the absence of a general preference based method to elicit the utility for gains and losses simultaneously this paper proposes such a method and uses it to measure loss aversion in an experimental study without making any parametric assumptions thus it is the first to obtain a parameter free elicitation of prospect theory s utility function on the whole domain our method also provides an efficient way to elicit utility midpoints which are important in axiomatizations of utility several definitions of loss aversion have been put forward in the literature according to most definitions we find strong evidence of loss aversion at both the aggregate and the individual level the degree of loss aversion varies with the definition used which underlines the need for a commonly accepted definition of loss aversion

the aversion to lying abstract we experimentally investigate the effect of cheap talk in a bargaining game with one sided asymmetric information a seller has private information about her skill and is provided an opportunity to communicate this information to a buyer through a written message four different treatments are compared one without communication one with free form communication and two treatments with pre specified communication in the form of promises of varying strength our results suggest that individuals have an aversion towards lying about private information and that the aversion to lying increases with the size of the lie and the strength of the promise freely formulated messages lead to the fewest lies and the most efficient outcomes