Adding a third-party player in the sender-receiver deception game

Abstract

Does adding a third-party player influence the tendency to lie? Lies often affect more than just two parties. The sender is often not the only beneficiary of the lie, and the receiver is often not the only person harmed. In this paper, we study the effect of introducing an uninvolved third party on people’s tendency to behave dishonestly. This research adapts the cheap-talk game to investigate the effect of introducing a third-party beneficiary and a third-party victim. That is, in addition to the sender and the receiver in the original game, we introduce another player who does not know the payoff structure and does not make any decisions. This third-party player’s payoff can differ across payment options: the third-party can be a victim, a neutral third-party, or a beneficiary of the lie. We show that people’s decision about whether to lie depends on the payoff split between the sender and the receiver, as well as the payoff to the third party. Moreover, we find that people show a greater sensitivity to the presence of a third-party beneficiary than to the presence of a third-party victim. Specifically, our results indicate that adding a third-party beneficiary increases one’s tendency to lie; introducing a third-party victim, though, does not lower the tendency. When both a beneficiary and victim are introduced, the beneficiary dominates the victim, so the inclination to lie rises.