Lying aversion, lobbying, and context in a strategic communication experiment

Almost all institutions within modern democracies depend on a mix of communication and competition. However, most formal theory and experimental evidence ignores one of these two features. We present a formal theory of communicative competition in which senders vary in their aversion to lying, and test hypotheses from this theory using a strategic communication experiment. To influence lying aversion, we compare a Context Condition, in which pre-play instructions are cast in political language, with a Baseline Condition, in which all language is abstract. We find that in early rounds of play, subjects in the Context Condition exaggerated more as a function of their biases than those in the Baseline Condition when we control for the past history of play. However, by the last round of play, subjects in both conditions converged on persistent exaggeration. This finding indicates that competition crowds outlying aversion in settings of strategic communication.