On Lies and Hard Truths.

We run an experimental study using sender-receiver games to evaluate how senders' willingness to lie to others compares to their willingness to tell hard truths, i.e., promote an outcome that the sender knows is unfair to the receiver without explicitly lying. Unlike in previous work on lying when it has consequences, we do not find that antisocial behavior is less frequent when it involves lying than when it does not. In fact, we find the opposite result in the setting where there is social contact between senders and receivers, and receivers have enough information to judge whether they have been treated unfairly. In this setting, we find that senders prefer to hide behind a lie and implement the antisocial outcome by being dishonest rather than by telling the truth. These results are consistent with social image costs depending on the social proximity between senders and receivers, especially when receivers can judge the kindness of the senders' actions.

Punishing liars-How monitoring affects honesty and trust.

Previous experiments have shown that the possibility to punish liars does not per se increase honesty in principal-agent relationships. In this study, we first establish a punishment mechanism that substantially enhances honest behavior and trust in a sender-receiver game: the possibility to impose severe sanctions that are cost-free for enforcers. Adopting this effective mechanism, we investigate how variations in the probability of detecting lies affect sender and receiver. We find that high honesty levels persist under such punishment mechanism even when the detection probability is significantly reduced. Furthermore, the relationship between monitoring and honesty does not follow a linear trend, as a moderate monitoring level proves to be less effective in enhancing honesty than high or very low levels. The punishment mechanism has an even more robust effect on receivers, showing similarly high levels of trust independently of the detection probability. Our analysis of subjects' beliefs provides further insights into the mechanics behind these behavioral patterns.