XXXII Jornadas de Economía Industrial. Pamplona, 7-8 septiembre, 2017Previous findings have shown tha
t punishment does not
necessarily
reduce deception i
n
principal agent
-
relationships
.
We
shed
further
light on this issue by
first
identifying
a punishment
mechanism that
substantially
decreases
deception
in
a sender
-
receiver game:
the possibility
of imposing
severe sanctions that are cost
-
free for the enforcer. Keeping
this
effective
combination
of
punishment
costs and severity
constant
, we then investigate how a reduction in monitoring affects deception
by
c
ompar
ing
assured revelation
of s
ender behavior
ex post
with a
treatment
in which
it
is disclosed with
just
50% probability
. We
find
a similarly
strong
deterrence effect
in both
treatments
suggesting
that
punishment
works
in a
part
icular
way
in the deception context:
o
nce it is a credible threat,
it
does not
require complete monit
oring
to
be effective
.
We also find
that receivers show
s
imilar
trust level
s
in
senders’ messages for
both
punishment treatments
, which are significantly higher than in the
corresponding
baseline
s
without
sanctions
,
further
support
ing
ou
r conclusion