Telling the other what one knows? Strategic lying in a modified acquiring-a-company experiment with two-sided private information

Article


Angelovski, A., Di Cagno, D., Güth, W. and Marazzi, F. 2020. Telling the other what one knows? Strategic lying in a modified acquiring-a-company experiment with two-sided private information. Theory and Decision. 88 (1), pp. 97-119. https://doi.org/10.1007/s11238-019-09715-6
TypeArticle
TitleTelling the other what one knows? Strategic lying in a modified acquiring-a-company experiment with two-sided private information
AuthorsAngelovski, A., Di Cagno, D., Güth, W. and Marazzi, F.
Abstract

Lying for a strategic advantage is to be expected in commercial interactions. But would this be more or less obvious when lying could come from either party and question mutually profitable exchange? To explore this, we modify the acquiring-a-company game (Samuelson and Bazerman in Res Exp Econ 3:105–138, 1985) by letting both, buyer and seller, be privately informed. Specifically, the value of the company for the buyer is known only by the seller; whereas, only the buyer is aware by which proportion the sellers evaluation is lower than that of the buyer. Before bargaining, both parties can reveal what they know via cheap-talk numerical messages. Game theoretically, the pooling equilibrium may or may not allow for trade depending on the commonly known expected evaluation discrepancy. By mutually revealing what one knows, one could boost trade and efficiency. Although strategic misreporting prevails quite generally, it is higher for sellers throughout the experiment. Regarding gender, women misreport less, especially as sellers, and offer higher prices.

KeywordsBargaining; Private information; Cheap talk; Acquiring-a-company game
Research GroupDiversity and Gender group
PublisherSpringer
JournalTheory and Decision
ISSN0040-5833
Electronic1573-7187
Publication dates
Online18 Jul 2019
PrintFeb 2020
Publication process dates
Deposited25 Nov 2019
Accepted25 Jun 2019
Output statusPublished
Accepted author manuscript
File Access Level
Open
Copyright Statement

This version of the article has been accepted for publication, after peer review (when applicable) and is subject to Springer Nature’s AM terms of use https://www.springernature.com/gp/open-research/policies/accepted-ma... , but is not the Version of Record and does not reflect post-acceptance improvements, or any corrections. The Version of Record is available online at: http://dx.doi.org/10.1007/s11238-019-09715-6

Digital Object Identifier (DOI)https://doi.org/10.1007/s11238-019-09715-6
Web of Science identifierWOS:000512045800006
LanguageEnglish
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