Lying: An Experimental Investigation of the Role of Situational Factors

ABSTRACT: Individuals often lie for psychological rewards (e.g., preserving self image and/or protecting others), absent economic rewards. We conducted a laboratory experiment, using a modified dictator game, to identify conditions that entice individuals to lie solely for psychological rewards. We argue that such lies can provide a ready means for individu-als to manage others ' impression of them. We investigated the effect of social distance (the perceived familiarity, intimacy, or psychological proximity between two parties) and knowledge of circumstances (whether parties have common or asymmetric information) on the frequency of lying. We found that lying occurs more frequently when social distance is near and that the effect is exacerbated when information is asymmetric. Our theoretical development suggests that, under these conditions, individuals ' need to manage others' impression is magnified. We discuss the implications of our findings. LYING IS the act of intentionally trying to mislead another (DePaulo, Kashy,Kirkendol, Wyer, and Epstein 1996). Lying is a ready means by which organi-zational and personal fraud are committed (Comer 1997; Titus and Grover 2001). Without question, fraud has a dramatic negative impact on the global economy. The Association of Certified Fraud Examiners ' 2010 Report to the Nations o