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Money or friends: Social identity and deception in networks

Author

Listed:
  • Rong, Rong
  • Houser, Daniel
  • Dai, Anovia Yifan
Abstract
Strategic communication occurs in virtually all committee decision environments. Theory suggests that small differences in monetary incentives between committee members can leave deception a strategically optimal decision (Crawford and Sobel, 1982; Galeotti et al., 2013). At the same time, in natural environments social incentives can also play an important role in determining the way people share or withhold truthful information. Unfortunately, little is known about how monetary and social incentives interact to determine truth-telling. We investigate this issue by first building a novel model and then testing its equilibrium predictions using laboratory data. In the absence of social identity, the model׳s predictions are supported: there is more truthful communication between those who share monetary incentives than those who do not. We find that the effect of identity is asymmetric: sharing the same identity does not promote truth-telling but holding different identities reduces truthfulness. Overall, as compared to environments lacking social identity, committees with both monetary and social incentives exhibit truthful communication substantially less frequently.

Suggested Citation

  • Rong, Rong & Houser, Daniel & Dai, Anovia Yifan, 2016. "Money or friends: Social identity and deception in networks," European Economic Review, Elsevier, vol. 90(C), pages 56-66.
    • Handle: RePEc:eee:eecrev:v:90:y:2016:i:c:p:56-66
    DOI: 10.1016/j.euroecorev.2016.04.003
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    References listed on IDEAS

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    Cited by:

    1. Suchon, Rémi & Houser, Daniel, 2022. "Image spillovers in groups and misreporting," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 302-314.
    2. Nives Della Valle & Matteo Ploner, 2017. "Reacting to Unfairness: Group Identity and Dishonest Behavior," Games, MDPI, vol. 8(3), pages 1-19, July.
    3. Song, Jian & Houser, Daniel, 2021. "Non-exclusive group contests: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 87(C).
    4. Fortuna Casoria & Ernesto Reuben & Christina Rott, 2022. "The Effect of Group Identity on Hiring Decisions with Incomplete Information," Management Science, INFORMS, vol. 68(8), pages 6336-6345, August.
    5. Jin Zheng & Arthur Schram & Gönül Doğan, 2021. "Friend or foe? Social ties in bribery and corruption," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 854-882, September.
    6. Charness, Gary & Jiang, Xin, 2023. "Fortune and identity," Economics Letters, Elsevier, vol. 222(C).
    7. Schütt, Christoph A. & Pipke, David & Detlefsen, Lena & Grimalda, Gianluca, 2023. "Does ethnic heterogeneity decrease workers’ effort in the presence of income redistribution? An experimental analysis," European Journal of Political Economy, Elsevier, vol. 79(C).
    8. Cacault, Maria Paula & Grieder, Manuel, 2019. "How group identification distorts beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 63-76.
    9. Horstmann, Elaine & Blankenberg, Ann-Kathrin & Schneider, Tim, 2017. "Cooperation in public goods games: Enhancing effects of group identity and competition," University of Göttingen Working Papers in Economics 324, University of Goettingen, Department of Economics.
    10. Schütt, Christoph & Pipke, David & Detlefsen, Lena & Grimalda, Gianluca, 2022. "Does ethnic heterogeneity decrease workers' effort in the presence of income redistribution? An experimental analysis," Kiel Working Papers 2228, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    D85; D02; C92; Social networks; Deception; Committee decision making; Strategic information transmission; Parochial altruism; Experiments;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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