Pinocchio's Pupil: Using Eyetracking and Pupil Dilation to Understand Truth Telling and Deception in Sender-Receiver Games

Abstract

We conduct laboratory experiments on sender-receiver games with an incentive for biased transmission (such as security analysts painting a rosy picture about earnings prospects). Our results confirm earlier experimental findings of "overcommunication"-messages are more informative of the true state than they should be, in equilibrium theory. Furthermore, we used eyetracking to show that senders look much less at receiver payoffs compared to their own payoffs. At the same time, the senders' pupils dilate when they send deceptive messages, and dilate more when the deception is larger in magnitude. Together, these data are consistent with the hypothesis that figuring out how much to deceive another player is cognitively difficult.Using a combination of sender messages, lookup patterns, and pupil dilation, we can predict the true state about twice as often as predicted by equilibrium.Using these measures would enable receiver subjects to earn 6-8 percent more than they actually do.

On the persistence of strategic sophistication

“…Many papers find strong support for Level-k play in certain games using behavioral data alone [62,63,54,31,42,10,18] or behavioral data augmented with lookup data [24,23] or eye-tracking data [19,65]. For some games, however, the Level-k model does not appear to organize the data well [43,44,26].…”

“…The Level-k model has also been applied successfully to a variety of other games, including "hide-and-seek" games [27], incomplete-information betting games [11], betting games and matrix games [57], coordinated attack games [48], sender-receiver games augmented with eye-tracking data [65], and cheap-talk games [45]. In the field, Level-k has been shown to fit behavior in Swedish lowest-unique-positive-integer lottery games [55] and to explain the fact that movies that were not released to critics before their public opening earn higher revenues [12].…”

Measuring Attention and Strategic Behavior in Games with Private Information

“…Last, the answers to the Questionnaire have again little effect. 46 Table 19: Probit regression on Nash play by groups of clusters (* = significant at the 10% level, ** = significant at the 5% level, *** = significant at the 1% level).…”

Neuroeconomics: Using Neuroscience to Make Economic Predictions

“…Wang, Spezio and Camerer (2006) studied experimentally a classic "biasedtransmission game" that has been widely used in economics and political science. In this game, a sender observes a state S, an integer from 1 to 5 (uniformly distributed).…”