The impact of lying aversion and prosocial lies on cheating

Abstract This paper examines how prosocial motivations shape lying behavior in a strategic setting. Two players each privately choose a color in their mind, then draw a color at random, and report whether the two colors match. Both players receive a high payoff if at least one reports a match, so a single lie secures the payoff for both, making lies strategic substitutes. I develop a theoretical model in which individuals bear a psychological cost of lying but experience a lower cost when their lie increases their partner’s payoff. The model predicts that individuals are less likely to lie when they can rely on their partner to do so, and more likely to lie when their dishonesty benefits their partner. I test these predictions in an online experiment with four treatments that separately vary the opportunity to rely on the partner’s lie and the presence of a benefit to the partner. In this setting, prosocial motives outweigh lying aversion: participants lie more when their dishonesty benefits their partner, and they do not lie less when they can leave the lie to their partner. Lying increases only when a participant’s report is pivotal to the partner’s payoff, indicating that prosocial preferences reduce the net cost of lying when dishonesty is instrumental in generating benefits for others.