Paper
Lies, Labels, and Mechanisms
Authors
Alex L. Brown, Ethan Park, Rodrigo A. Velez
Abstract
We test whether lying aversion can steer equilibrium selection in mechanism design. In a principal-worker environment, the direct mechanism admits two dominant-strategy equilibria: the designer's target and a worker-optimal outcome. We show this limitation persists for all robust mechanisms, then ask whether framing misreports as explicit lies helps. We develop a 2X2 experiment that varies direct vs. extended mechanisms with implicit vs. explicit messages. We find that framing misreporting of type as an explicit lie shifts play away from the worker-optimal outcome toward truthful reporting, raising designer payoffs with minimal efficiency loss. These findings indicate that lying aversion is an effective lever for aligning behavior with social objectives.
Metadata
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Raw Data (Debug)
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"raw_xml": "<entry>\n <id>http://arxiv.org/abs/2602.16973v1</id>\n <title>Lies, Labels, and Mechanisms</title>\n <updated>2026-02-19T00:26:05Z</updated>\n <link href='https://arxiv.org/abs/2602.16973v1' rel='alternate' type='text/html'/>\n <link href='https://arxiv.org/pdf/2602.16973v1' rel='related' title='pdf' type='application/pdf'/>\n <summary>We test whether lying aversion can steer equilibrium selection in mechanism design. In a principal-worker environment, the direct mechanism admits two dominant-strategy equilibria: the designer's target and a worker-optimal outcome. We show this limitation persists for all robust mechanisms, then ask whether framing misreports as explicit lies helps. We develop a 2X2 experiment that varies direct vs. extended mechanisms with implicit vs. explicit messages. We find that framing misreporting of type as an explicit lie shifts play away from the worker-optimal outcome toward truthful reporting, raising designer payoffs with minimal efficiency loss. These findings indicate that lying aversion is an effective lever for aligning behavior with social objectives.</summary>\n <category scheme='http://arxiv.org/schemas/atom' term='econ.GN'/>\n <published>2026-02-19T00:26:05Z</published>\n <arxiv:primary_category term='econ.GN'/>\n <author>\n <name>Alex L. Brown</name>\n </author>\n <author>\n <name>Ethan Park</name>\n </author>\n <author>\n <name>Rodrigo A. Velez</name>\n </author>\n </entry>"
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