Can increased competition for jobs explain interview lying?

We examine a supposedly positive relation between competition in a job contest and interview lying. In the basic model two candidates are interviewed by a recruiter concerning a vacancy. The applicants can be high or low performing, which is private information. During the interviews the applicants make a statement about their performance (a cheap talk phase) and afterwards the recruiter receives two independent signals about the applicants’ types. We show that an increase in the expected "quality" of the applicants can (i) cause a sudden increase in interview lying (i.e. failure of a separating equilibrium), and (ii) make the recruiter, ex ante, worse off.