Our methodology advances on all these insights. We follow the Azfar-Murrell (2009) definition of reticence—a reticent respondent is one who gives knowingly false answers with a nonzero probability when honest answers to a specific set of survey questions could generate the inference that the respondent might have committed a sensitive act. This definition directly leads to a precise specification of how different types of respondents answer sensitive questions and therefore explicit predictions on how survey answers vary with respondent reticence and guilt. We frame these predictions in terms of three moment functions: the expected value of the response to a sensitive CQ and the expected mean and variance of the number of yes responses on a set of sensitive RRQs. The expected moments are functions of three probabilities—that a respondent is guilty on the sensitive acts, that a respondent exhibits reticence in answering sensitive questions, and that a reticent respondent is not candid in answering any specific sensitive question.

Using those three moment conditions within a standard method of moments estimator, we estimate the three probabilities. We follow Azfar and Murrell (2009) and Clausen et al. (2011) in using a set of seven RRQs, the resultant pattern of responses facilitating identification of reticence. Identification of reticence-adjusted guilt rests on the same insight as that of Clarke and Deshairnais (1998)—that identification requires RRQs with different randomization probabilities. In our implementation we use seven RRQs and one CQ, noting that a CQ is a limiting case of an RRQ.

Our paper proceeds in the following way. In Section 2, we briefly describe the Peru Enterprise Survey, discussing in some detail the CQ and RRQs that we use to develop our estimates of reticence and guilt. In Section 3, we lay out the statistical model of respondent behavior and show how observable moments in the data from the CQ and RRQs reveal information about the prevalence of respondent reticence, reticent behavior on any specific question, and guilt. Section 4 contains our main results from the Peru Enterprise Survey, while Section 5 provides cross-country evidence from the Gallup World Poll. In Section 6 we generalize our statistical model to allow for the realistic possibility that guilt and reticence are correlated across respondents and show how this leads to even higher estimates of guilt in the Peruvian data. Section 7 offers concluding remarks. Details on the survey questions and on the derivations of the relevant moments are in Appendices A and B.

# **2. The Context**

We implement our methodology using data from the 2010 World Bank survey of Peruvian firms (World Bank Enterprise Surveys 2012). Peru is an upper middle-income country with a population of 23 million and an economy that has been one of the fastest-growing in Latin America in the last decade. The survey polled business owners and top managers in a sample of 1,000 firms representative of the economy's private sector. Interviews occurred from April 2010 through April 2011. Given the sensitive nature of some of the data collected, the World Bank Enterprise Survey team emphasizes the efforts made to ensure confidentiality of responses. Its description of the survey methodology notes _"Confidentiality of the survey respondents and the sensitive information they provide is necessary to ensure the greatest degree of survey participation, integrity and confidence in the quality of the data._ 5