Halliday, Simon and Lafky, Jonathan and Wilson, Alistair
(2025)
Honesty on the Margins.
(Submitted)
Abstract
We examine how competition affects honesty through two channels: an intensive margin (endogenizing the rewards to exaggeration) and an extensive margin (endogenizing the pool of competitors via an outside option). Using the lying and reputation-cost preference model from the Abeler et al. (2019) metastudy we predict minimal effects on honesty from either channel in isolation, but a sharp decrease in honesty with both competitive channels. Our experimental results confirm the predictions of the model, over both reports and entry/exit behavior. However we do detect some anomalies, suggesting that smaller communities/groups can have persistent honesty even with both competitive forces.
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