426. Designing Self-Reporting Regimes to Encourage Truth Telling: An Experimental Study

Lana Friesen & Lata Gangadharan, School of Economics Discussion Paper No. 426, May 2010, Updated May 2012, School of Economics, The University of Queensland. Australia.

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Abstract

We report results from an experiment that investigates truthfulness in self-reporting under different reporting regimes. The experiment involves a production task with self-reporting of accidents, with reporting compulsory for some participants, but only voluntary for others. We find that dishonesty is prevalent, but accident reporting is more frequent with compulsory reporting compared with voluntary. This suggests that lie aversion is a stronger force than the intrinsic motivation to voluntarily report, and that careful design of self-reporting regimes is necessary by enforcement agencies to achieve satisfactory compliance outcomes. Our results are relevant for several areas beyond regulatory compliance, including dishonesty in social security claims, insurance claims, workplace expense claims, income tax returns, and financial reporting.