The value of lies in a power-to-take game with imperfect information

Damien Besancenot (1) , Delphine Dubart (2) , Radu Vranceanu (3)

1 CEPN - Centre d'Economie de l'Université Paris Nord
2 ESSEC Business School
3 ESSEC Business School and THEMA (UMR 8184)

Humans can lie strategically in order to leverage on their negotiation power. For instance, governments can claim that a "scapegoat" third party is responsible for reforms that impose higher costs on citizens, in order to make the pill sweeter. This paper analyzes such communication strategy within a variant of the ultimatum game. The first player gets an endowment, and the second player can impose a tax on it. The former can reject the allocation submitted by the tax-setter. A third party is then allowed to levy its own tax, and its intake is private information to the tax-setter. In a frameless experiment, 65% of the subjects in the tax-setter role overstate the tax levied by the third party in order to manipulate taxpayer's expectations and submit less advantageous offers; on average, for every additional currency unit of lie, measured by the gap between the claimed and the actual tax, they would reduce their offer by 0.43 currency units.

Mots clés: Ultimatum game; Taxation; Lies; Deception; Asymmetric information

Domaines: Economies et finances

Damien Besancenot, Delphine Dubart, Radu Vranceanu. The value of lies in a power-to-take game with imperfect information. 2012. ⟨hal-00690409⟩