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

Angelovski, Andrej ORCID: https://orcid.org/0000-0003-3011-8002, Di Cagno, Daniela, Guth, Werner and Marazzi, Francesca (2019) Telling the other what one knows? Strategic lying in a modified acquiring-a-company experiment with two-sided private information. Theory and Decision . pp. 1-23. ISSN 0040-5833 [Article] (Published online first) (doi:10.1007/s11238-019-09715-6)

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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.

Item Type: Article
Research Areas: A. > Business School
A. > Business School > Economics
A. > Business School > Leadership, Work and Organisations
A. > Business School > Leadership, Work and Organisations > Diversity and Gender group
Item ID: 28306
Notes on copyright: This is a post-peer-review, pre-copyedit version of an article published in Theory and Decition. The final authenticated version is available online at: http://dx.doi.org/10.1007/s11238-019-09715-6
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Depositing User: Andrej Angelovski
Date Deposited: 25 Nov 2019 16:25
Last Modified: 25 Jul 2020 02:03
URI: https://eprints.mdx.ac.uk/id/eprint/28306

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