Friday, May 20, 2011

A Mater of Truthiness

I’ve been doing some research on lying lately. There’s a wealth of really interesting literature out there, but most of it is (IMHO) flawed. The main method of collecting data is based on surveys. Basically, this means the researchers are asking people to honestly tell them about instances of dishonest behaviour. I’d be counting on you to tell me the truth about lying.

I’ve been using a different technique. I give subjects an opportunity to lie to another subject for money. Depending on the situation, a little more than half the people I had as subjects (about 200) lied. Not all that surprising. What surprised me is the types of things that seem to influence a person’s likelihood of lying.

I designed the experiment to see if there was a difference in lying based on if the subject faced a potential gain or a potential loss. An asymmetric value function, like the one I’ve written about here before, predicts that people are more likely to lie when facing a loss. This is actually what I discover. So pay extra attention when dealing with someone who has something to lose.

The common perception is that women are more trustworthy than men. Well, not in this experiment. Men and women were equally likely to lie. Some other researchers using similar environments found that women were actually less likely to lie for monetary gain. These experiments were done in Sweden and the US. Canadian women,it seems, are more like males than their Swedish or American sisters. Score one for Canadian equality?

Having divorced parents is known to mess kids up. I found that people who’s parents are divorced are more likely to lie than others. What I found really interesting though was that people who reported being raised by a single parent were a lot less likely to lie. I’m not sure why that might be. Keep in mind that I’ve got a sample selection problem in that the people I’m talking about are all university students. So it might be that only the most well adjusted/honest kids raised by a single parent make it that far.

One of my favourite results of this work is that the faculty of the student seems to make a difference. In particular, business students lie a lot more than others. There are a couple of interesting possibilities. First, business students may be more sensitive to monetary reward and are therefore more likely to lie for cash. It could also be that business students have a lower “cost” of lying and are more likely to do it. These are similar, but not quite the same thing. It could also be that business students are more competitive. Lying meant you ended up with more money than the other person in this environment. That could have been a key motivating factor.

In short, we don’t really have a handle on why and when people lie. We’re getting better at catching them in the act, but predicting when it will happen? Not really sure.


Anonymous said...

As a graduate business student, I can attest to the fact that "lying" or "bending the facts" in lawyer speak IMHO is due to the competitive nature of the business world. This does not mean that all lie or there is no lying in other faculties or departments etc., but the opportunities and incentives to fib are greater.

Could be a classic situation of the carrot vs the stick. For example, the current financial crisis didn't show any real sticks, a lot of people got good carrots and plenty of them. Moral hazard to the extreme. Sure does not bode well for good governance and less lying. Action speaks louder than words, therefore, you lie, you cheat, the consequences must match. So far that hasn't occurred.

Technology too has played an important role in this. While it does help to catch and minimize fibs, it too helps to facilitate it and cover it up really good, so good, that it does become a cost vs benefit calculation whether or not to penalize a lie or not.

Lying won't disappear but it can be minimized by using a classic economic solution and simple one too.....incentives/pricing mechanism.


Anonymous said...

Pretty much all the honest truth telling in the world is done by children.

Oliver Wendell

Anonymous said...

Childs, im not sure if its the the "winning" nature to make business individuals lie more or if its the fear of "No" that drives them to it. This line of thinking might shed some light on the topic.

Money has a lot to do with it in most cases. But Business boils down to sales. A sales associate's worst nightmare is the customer saying "no". There goes all the time and effort invested in that customer down the drain.

So why wouldnt they lie? Bending the truth, or making the pot sweeter than it actually is, gives the sales associate a percentage swing in hearing "Yes".

Its not really about winning or money. Its about NOT hearing that rejection.

Tim Daley

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