Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56266
Authors: 
Lundquist, Tobias
Ellingsen, Tore
Gribbe, Erik
Johannesson, Magnus
Year of Publication: 
2007
Series/Report no.: 
SSE/EFI Working Paper Series in Economics and Finance 666
Abstract: 
We experimentally investigate the effect of cheap talk in a bargaining game with one-sided asymmetric information. A seller has private information about his or her skill and is provided an opportunity to communicate this information to a buyer through a written message. Four different treatments are compared; one without communication, one with free-form communication, and two treatments with pre-specified communication in the form of promises of varying strength. Our results suggest that lying about private information is costly and that the cost of lying increases with the size of the lie and the strength of the promise. Freely formulated messages lead to the fewest lies and the most efficient outcomes.
Subjects: 
Deception
Communication
Lies
Promises
Experiments
JEL: 
C91
D82
Document Type: 
Working Paper

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