Reducing deception through subsequent transparency - An experimental investigation

Asymmetric information is a common characteristic of economic relationships and often provides incentives to deceive. Being aware of previous findings showing that ex ante transparency about conflicts of interest leads to even more deception, we hypothesize that the timing of disclosing a conflict of interest plays a role in this context. Using different scenarios of a sender-receiver game, we investigate if, instead of providing ex ante information, the effect of an ex post disclosure is to reduce treacherous advice. Our results show that timing actually matters: subsequent transparency significantly reduces deception when it is announced as a threat, which creates awareness of the presence of a whistleblower. An intrinsic motivation seems to play a certain role that goes beyond lying and guilt aversion: embarrassment. Furthermore, we examine if the provision of different alternatives to deception (honest vs. payoff-equalizing messages) has an important impact on individual behavior. We find that honesty is not the most favored alternative to deception. Subsequent transparency increases honest behavior only under particular conditions but strongly increases the tendency to equalize payoffs.