title: 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.
authors.affiliation: School of Economics, University of Edinburgh, Edinburgh, UK.
authors.forename: Michèle
authors.initials: M
authors.lastname: Belot
authors.affiliation: Tinbergen Institute, Amsterdam School of Economics, University of Amsterdam, Amsterdam, Netherlands.
authors.forename: Jeroen
authors.initials: J
authors.lastname: van de Ven
keywords: Asymmetric information; Deception; Experiment; Face-to-face interaction; Lie detection