Group lying with negative externality

Abstract

We use a modified die-rolling experiment to study whether negative externality affects a group's decisions about whether to cheat. Our results show that group members are less likely to lie when faced with a passive out-group player only if two members of the group share an unequal payment for lying. The less-paid party in the group plays a dominant role in the honest decision by proposing the true number more frequently in arguments for group coordination.