Pinocchio's Pupil: Using Eyetracking and Pupil Dilation To Understand Truth-telling and Deception in Games

We conduct laboratory experiments on sender-receiver games with an incentive for biased transmission (such as security analysts painting a rosy picture about earnings prospects). Our results confirm earlier experimental findings of “overcommunication”—messages are more informative of the true state than they should be, in equilibrium theory. Furthermore, we used eyetracking to show that senders look much less at receiver payoffs compared to their own payoffs. At the same time, the senders’ pupils dilate when they send deceptive messages, and dilate more when the deception is larger in magnitude. Together, these data are consistent with the hypothesis that figuring out how much to deceive another player is cognitively difficult. Using a combination of sender messages, lookup patterns, and pupil dilation, we can predict the true state about twice as often as predicted by equilibrium. Using these measures would enable receiver subjects to earn 6-8 percent more than they actually do. * April 26, 2006. Wang: Division of Humanities and Social Sciences, California Institute of Technology, MC228-77, 1200 E California Blvd, Pasadena, CA 91125 (e-mail: [email protected]); Spezio: Division of Humanities and Social Sciences, California Institute of Technology, MC228-77, 1200 E California Blvd, Pasadena, CA 91125 (e-mail: [email protected]); Camerer: Division of Humanities and Social Sciences, California Institute of Technology, MC228-77, 1200 E California Blvd, Pasadena, CA 91125 (e-mail: [email protected]). Research support was provided by an internal Provost grant, and a Human Frontiers of Society Program (HFSP) grant coordinated by Angela Sirigu, to the third author. Thanks to comments from Robert Ostling and Moran Surf, and the audience of the ESA 2005 North American Regional Meeting, Tucson, AZ.