Direct Revelation Under Lying Aversion

Abstract

Recent research has shown people are lying averse; it is as if they suffer monetary costs from not telling the truth. By using a game proposed by Repullo (1985) we study the differential effect of lying aversion and direct pecuniary incentives in the operation of an economic institution. We design an economics experiment that implements this game in a laboratory environment. It is predicted that there will be both evidence of lying aversion and response to direct incentives. We detail how empirical results would allow us to discriminate what is the role, or relative importance, of these two effects.