Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments November 12, 2012 erstellt
Description:
The paper develops an experimental reporting game that has a unique signal-jamming equilibrium (SJE) where managers exaggerate the truth and market participants correct the managers' reports by a constant independent of the state. During experimental sessions, managers exaggerate and market participants correct on average. However, most subjects deviate from SJE behavior: (1) both managers and market participants use mixed strategies that are dominated by pure strategies, and (2) managers exaggerate by more and market participants correct by less when the observed state is low. These behaviors provide a parsimonious explanation for several empirical regularities documented in the literature on fraud