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Is It a Lie if I Don't Know? Self-Serving Dishonesty Under Ignorance

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  • Sven A. Simon

Abstract

Ignorance of facts and laws may provide an excuse for self-serving reporting behavior, even when it comes at the risk of telling the untruth. This paper studies what decision-makers report when they do not know their true entitlement to a financial gain, and why they do so. In a theory-guided experiment, I show that ignorance of one's true entitlement leads to a pronounced increase in self-serving but untruthful reporting behavior. Two factors determine the reporting decision under ignorance: (i) the decision-maker's belief of the true entitlement and (ii) the absence of a commonly accepted social norm. However, the scope of ignorance as an excuse is limited. Most individuals seek information on their true entitlement to the financial gain once they have the opportunity to do so. Complementary survey evidence highlights the prevalence of uninformed reporting decisions in the field and provides additional insights on behavioral motivations.

Suggested Citation

  • Sven A. Simon, 2020. "Is It a Lie if I Don't Know? Self-Serving Dishonesty Under Ignorance," Working Papers tax-mpg-rps-2020-12, Max Planck Institute for Tax Law and Public Finance.
    • Handle: RePEc:mpi:wpaper:tax-mpg-rps-2020-12
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    More about this item

    Keywords

    lying behavior; dishonesty; ignorance; information avoidance; laboratory experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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