How Private is Private Information? The Ability to Spot Deception in an Economic Game

Abstract

We provide experimental evidence on the ability to detect deceit in a buyer-seller game with asymmetric information. Sellers have private information about the value of a good and sometimes have incentives to mislead buyers. We examine if buyers can spot deception in face-to-face encounters. We vary whether buyers can interrogate the seller and the contextual richness. The buyers' prediction accuracy is above chance, and is substantial for confident buyers. There is no evidence that the option to interrogate is important and only weak support that contextual richness matters. These results show that the information asymmetry is partly eliminated by people's ability to spot deception.Electronic supplementary material The online version of this article

Promises and lies: can observers detect deception in written messages

“…Research on deception detection has appeared in both psychology and economics. Key findings from economics indicate that people notice and respond to some cues (for example, gender and presence of a handshake), but not others (e.g., participants’ past behavior) (see, e.g., Belot et al 2012 ; Darai and Grätz 2010 ; Wang et al 2010 ; Belot and van de Ven 2016 ). These results, however, are based only on face-to-face communication.…”