Please join us as the Department of Economics welcomes Dr. Olga Shurchkov, who will present: "The Optimal Size of a Lie: Persuasion and Perceptions in Cheating Games" on Wednesday, March 25 at 3:30 PM in SAGE 3713.

Abstract: We study how individuals perceive and strategically manage truthfulness in quantitative reports, shedding light on the behavioral underpinnings of disinformation. While prior research has focused primarily on factors that drive senders to lie, we examine how accurately receivers detect deception and how both sides adjust their behavior in response to incentives to persuade. Using a large preregistered online experiment that includes a luck-based (die roll) and an effort-based task (matrix), we focus on how the extremeness of a report - how high or low it falls in the range of possible outcomes - affects its perceived credibility. We find systematic miscalibration on both sides: senders underutilize big lies that would have maximized payoffs, while receivers are overly skeptical of high reports. Receivers also fail to anticipate how senders' incentives to persuade alter their reporting behavior. We calibrate a structural model of lying that allows us to assess welfare implications. Taken together, the findings show how a strategic sender can exploit systematic misalignments in beliefs about credibility, particularly in high-stakes settings such as political communication, financial disclosure, and online media.