Hiding an Inconvenient Truth

Lies and Vagueness (Revision of DP 2008-107)

Research output: Working paperDiscussion paperOther research output

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Abstract

When truth conflicts with efficiency, can verbal communication destroy efficiency? Or are lies or vagueness used to hide inconvenient truths? We consider a sequential 2-player public good game in which the leader has private information about the value of the public good. This value can be low, high, or intermediate, with the latter case giving rise to a prisoners’ dilemma. Without verbal communication, efficiency is achieved, with contributions for high or intermediate values. When verbal com- munication is added, the leader has an incentive to hide the precise truth when the value is intermediate. We show experimentally that, when communication about the value must be precise, the leader frequently lies, preserving efficiency by exaggerating. When communication can be vague, the leader turns to vague messages when the value is intermediate, but not when it is high. Thus, she implicitly reveals all values. Inter- estingly, efficiency is still preserved, since the follower ignores messages altogether and does not seem to realize that vague messages hide inconvenient truths.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages29
Volume2010-80
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-80

Fingerprint

verbal communication
efficiency
Values
leader
communication
follower
prisoner
incentive

Keywords

  • Communication
  • Efficiency
  • Lying
  • Public Goods.

Cite this

Serra Garcia, M., van Damme, E. E. C., & Potters, J. J. M. (2010). Hiding an Inconvenient Truth: Lies and Vagueness (Revision of DP 2008-107). (CentER Discussion Paper; Vol. 2010-80). Tilburg: Microeconomics.
Serra Garcia, M. ; van Damme, E.E.C. ; Potters, J.J.M. / Hiding an Inconvenient Truth : Lies and Vagueness (Revision of DP 2008-107). Tilburg : Microeconomics, 2010. (CentER Discussion Paper).
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Serra Garcia, M, van Damme, EEC & Potters, JJM 2010 'Hiding an Inconvenient Truth: Lies and Vagueness (Revision of DP 2008-107)' CentER Discussion Paper, vol. 2010-80, Microeconomics, Tilburg.

Hiding an Inconvenient Truth : Lies and Vagueness (Revision of DP 2008-107). / Serra Garcia, M.; van Damme, E.E.C.; Potters, J.J.M.

Tilburg : Microeconomics, 2010. (CentER Discussion Paper; Vol. 2010-80).

Research output: Working paperDiscussion paperOther research output

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AU - Serra Garcia, M.

AU - van Damme, E.E.C.

AU - Potters, J.J.M.

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AB - When truth conflicts with efficiency, can verbal communication destroy efficiency? Or are lies or vagueness used to hide inconvenient truths? We consider a sequential 2-player public good game in which the leader has private information about the value of the public good. This value can be low, high, or intermediate, with the latter case giving rise to a prisoners’ dilemma. Without verbal communication, efficiency is achieved, with contributions for high or intermediate values. When verbal com- munication is added, the leader has an incentive to hide the precise truth when the value is intermediate. We show experimentally that, when communication about the value must be precise, the leader frequently lies, preserving efficiency by exaggerating. When communication can be vague, the leader turns to vague messages when the value is intermediate, but not when it is high. Thus, she implicitly reveals all values. Inter- estingly, efficiency is still preserved, since the follower ignores messages altogether and does not seem to realize that vague messages hide inconvenient truths.

KW - Communication

KW - Efficiency

KW - Lying

KW - Public Goods.

M3 - Discussion paper

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T3 - CentER Discussion Paper

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PB - Microeconomics

CY - Tilburg

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Serra Garcia M, van Damme EEC, Potters JJM. Hiding an Inconvenient Truth: Lies and Vagueness (Revision of DP 2008-107). Tilburg: Microeconomics. 2010. (CentER Discussion Paper).