We modify the Acquiring-a-Company game to study how information leaks affect lying and market outcomes in an ultimatum bargaining setting with asymmetric information. Privately informed sellers send messages about the alleged value of their company to potential buyers. Via random leaks buyers, however, can learn the true value before proposing a price which the seller finally accepts or not. Only 14.5% of the messages are truthful, whereas two-thirds of all sellers exaggerate the company’s value to persuade buyers to offer more, especially when the true value is small. Although a higher leak probability does not reduce the frequency of misreporting, it weakens overreporting and strengthens underreporting. Buyers who found out value misreporting anchor their price proposals on the true value but do not explicitly discriminate against liars. Sellers are mainly opportunistic and make their acceptances dependent on the resulting positive payoff. Even if ethical concerns do not seem to matter much, probabilistic leaks are welfare enhancing.

Who cares when Value (Mis)reporting May Be Found Out? An Acquiring-a-Company Experiment with Value Messages and Information Leaks / Di Cagno, Daniela Teresa; Marazzi, Francesca; Spadoni, Lorenzo; Gueth, Werner; Lohse, Tim. - In: JOURNAL OF BEHAVIORAL AND EXPERIMENTAL ECONOMICS. - ISSN 2214-8043. - 108:(2024), pp. 1-14. [10.1016/j.socec.2023.102151]

Who cares when Value (Mis)reporting May Be Found Out? An Acquiring-a-Company Experiment with Value Messages and Information Leaks

Di Cagno Daniela Teresa;Marazzi Francesca;Lorenzo Spadoni;Werner Gueth;
2024

Abstract

We modify the Acquiring-a-Company game to study how information leaks affect lying and market outcomes in an ultimatum bargaining setting with asymmetric information. Privately informed sellers send messages about the alleged value of their company to potential buyers. Via random leaks buyers, however, can learn the true value before proposing a price which the seller finally accepts or not. Only 14.5% of the messages are truthful, whereas two-thirds of all sellers exaggerate the company’s value to persuade buyers to offer more, especially when the true value is small. Although a higher leak probability does not reduce the frequency of misreporting, it weakens overreporting and strengthens underreporting. Buyers who found out value misreporting anchor their price proposals on the true value but do not explicitly discriminate against liars. Sellers are mainly opportunistic and make their acceptances dependent on the resulting positive payoff. Even if ethical concerns do not seem to matter much, probabilistic leaks are welfare enhancing.
2024
Acquiring-a-company experiments, Information leaks, Cheap talk, (Not) lying, Ultimatum bargaining
Who cares when Value (Mis)reporting May Be Found Out? An Acquiring-a-Company Experiment with Value Messages and Information Leaks / Di Cagno, Daniela Teresa; Marazzi, Francesca; Spadoni, Lorenzo; Gueth, Werner; Lohse, Tim. - In: JOURNAL OF BEHAVIORAL AND EXPERIMENTAL ECONOMICS. - ISSN 2214-8043. - 108:(2024), pp. 1-14. [10.1016/j.socec.2023.102151]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/235218
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