This paper reinterprets the evidence on lying or deception presented in Gneezy (2005, American Economic Review ). We show that Gneezy's data are consistent with the simple hypothesis that people are one of two kinds: either a person will never lie, or a person will lie whenever she prefers the outcome obtained by lying over the outcome obtained by telling the truth. This implies that so long as lying induces a preferred outcome over truth-telling, a person's decision of whether to lie may be completely insensitive to other changes in the induced outcomes, such as exactly how much she monetarily gains relative to how much she hurts an anonymous partner. We run new but broadly similar experiments to those of Gneezy in order to test this hypothesis. While we also confirm that there is an aversion to lying in our subject population, our data cannot reject the simple hypothesis described above either.Keywords: experimental economics, lying, deception, social preferences J.E.L. Classification: C91 * We thank Vince Crawford for encouragement and advice; Nageeb Ali, Jordi Brandts, Gary Charness, Arnaud Costinot, Nir Jaimovich, Ivana Komunjer, Albert Satorra, and Roberto Weber for comments and discussions; various seminar and conference audiences for feedback; and Tim Cason (the Editor) and two anonymous referees for very useful suggestions. We also thank Uri Gneezy for generously clarifying unpublished details about his experiments, and for bringing the work of Matthias Sutter to our attention.
We consider a linear price setting duopoly game with di erentiated products and determine endogenously which of the players will lead and which will follow. While the follower role is most attractive for each rm, we show that waiting is more risky for the low cost rm so that, consequently, risk dominance considerations, as in Harsanyi and Selten 1988, allow the conclusion that only the high cost rm will choose to wait. Hence, the low cost rm will emerge as the endogenous price leader. JEL Classi nation Numbers: C72, D43.
We consider a linear quantity setting duopoly game and analyze which o f t h e players will commit when both players have the possibility t o d o s o . T o that end, we study a 2-stage game in which e a c h player can either commit to a quantity i n stage 1 or wait till stage 2. We s h o w that committing is more risky for the high cost rm and that, consequently, risk dominance considerations, as in Harsanyi and Selten (1988), allow the conclusion that only the low cost rm will choose to commit. Hence, the low cost rm will emerge as the endogenous Stackelberg leader.Hurkens gratefully acknowledges nancial support from EC grant ERBCHGCT 93-0462.
We re-examine the literature on mobile termination in the presence of network externalities. Externalities arise when firms discriminate between on-and off-net calls or when subscription demand is elastic. This literature predicts that profit decreases and consumer surplus increases in termination charge in a neighborhood of termination cost. This creates a puzzle since in reality we see regulators worldwide pushing termination rates down while being opposed by network operators. We show that this puzzle is resolved when consumers' expectations are assumed passive but required to be fulfilled in equilibrium (as defined by Katz and Shapiro, AER 1985), instead of being rationally responsive to non-equilibrium prices, as assumed until now.
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