Truth-Telling and Trust in Sender-Receiver Games with Intervention : An Experimental Study

Recent experimental studies find excessive truth-telling in sender-receiver games. We show that this phenomenon is robust to the random intervention of a truthful regulator. In addition, intervention significantly increases the excessive trust of receivers while the overall percentage of truthful messages received do not change much with or without intervention. Hence, intervention becomes beneficial for receivers, and is justified as a tool for a policy maker acting on behalf of informationally inferior parties. We also offer an explanation for the behavior of senders and receivers under intervention