Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148863
Authors: 
Angelova, Vera
Regner, Tobias
Year of Publication: 
2016
Series/Report no.: 
SFB 649 Discussion Paper 2016-027
Abstract: 
Interactions between players with private information and opposed interests are often prone to bad advice and inefficient outcomes, e.g. markets for financial or health care services. In a deception game we investigate experimentally which factors could improve advice quality. Besides advisor competition and identifiability we add the possibility for clients to make a voluntary payment, a bonus, after observing advice quality. We observe a positive effect on the rate of truthful advice when the bonus creates multiple opportunities to reciprocate, that is, when the bonus is combined with identifiabilitiy (leading to several client-advisor interactions over the course of the game) or competition (allowing one advisor to have several clients who may reciprocate within one period). Moreover, identifiability significantly increases truth-telling under competition.
Subjects: 
asymmetric information
principal-agent
expert services
deception
sender-receiver game
reciprocity
reputation
experiments
voluntary payment
competition
JEL: 
C91
D03
D82
G20
I11
Document Type: 
Working Paper

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