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Presented By: Department of Economics

LYING AND DECEPTION IN REPUTATION BUILDING

Wooyoung Lim, Hong Kong University of Science and Technology

Wooyoung Lim Wooyoung Lim
Wooyoung Lim
This paper examines reputation building with repeated communication in a two-dimensional belief domain, identifying two environments where truth-telling (lying) in one dimension corresponds to deception (non-deception) in the other dimension. In one environment, a sender must tell the truth to conceal her misaligned preference with a receiver, while in the other, she must lie to reveal her aligned preference. A significant portion of senders in our experiments refrain from engaging in reputation-building despite material incentives. This departure from equilibrium behavior is influenced by both inference errors and preferences to avoid lying or deception, with the latter being the primary driver.

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