Disguising Lies - Image Concerns and Partial Lying in Cheating Games

Abstract

We study equilibrium reporting behavior in cheating games when agents have a fixed cost of lying and image concerns not to be perceived as a liar. We show that equilibria naturally arise in which agents with low costs of lying randomize among a set of the highest potential reports. Such equilibria induce a distribution of reports in line with observed experimental patterns. We also find that higher image concerns lead to an increase in the range of reported lies, while the effect of the fixed cost of lying is the opposite. (JEL C72, D82, Z13)