Intederdependent Lying Costs
We develop a theoretical model where individuals can have interdependent lying costs, i.e., the cost of lying of player i depends on the lies of player j. The model predicts that if the marginal cost of lying of player i is decreasing with the lies of player j, i.e., lies are strategic complements, then individuals will lie more in strategic interactions than in non-strategic situations in the absence of complementarities in production. The model also predicts that when two individuals are exposed to the same moral dilemma, and lies are strategic complements, then average lying under sequential play is higher than a ceteris-paribus simultaneous play. To test our predictions we develop a laboratory experimental design. We find our research to be relevant in addressing policy related questions such as whether observing peers' behaviour in moral dilemmas a ects own behaviour.