What Goes Around, Comes Around: Experimental Evidence on Exposed Lies

We experimentally investigate the optimal way to handle the uncovering of a noble lie, that is, a lie that supposedly is in the best interest of a given community. For this purpose, we analyze a public good game with feedback to group members on the average contributions of the other group members. The computer program inflates the feedback and shows higher than real average contributions to the high contributors. As shown by earlier studies, the partial feedback inflation increases the total payoff of the public good as it avoids the feeling of being a sucker for above average contributors. The lie is then uncovered and we continue with different feedback modes on contributions, some inflated, some true. We find that players respond similarly to both feedback modes. However, with true feedback, initial contributions in the second stage are significantly higher than with inflated feedback.