Journal of Economic Literature (JEL) Code(s)
D83, D82, K40, D72
We consider a model of Bayesian persuasion in which the Receiver can detect lies with positive probability. We show that the Sender lies more when the lie detection probability increases. As long as the lie detection probability is sufficiently small the Sender's and the Receiver's equilibrium payoffs are unaffected by the lie detection technology because the Sender simply compensates by lying more. When the lie detection probability is sufficiently high, the Sender's (Receiver's) equilibrium payoff decreases (increases) with the lie detection probability.
Ederer, Florian and Min, Weicheng, "Bayesian Persuasion with Lie Detection" (2021). Cowles Foundation Discussion Papers. 2596.