Paper Title
Telling an Impossible Lie: Detecting Individual Cheating in a Die-Under-The-Cup Task

Dishonesty is abundant in modern economic life. Taxpayers cheat the government, employees cheat their employers and producers systematically exploit consumers' psychological weaknesses and ignorance through manipulation and deception. Over the past two decades, behavioral economists and social psychologists have been designing numerous lab and field experiments with the purpose of deriving insights on people’s tendency to cheat. A popular cheating experiment is the die-under-the-cup paradigm, where subjects are asked to roll a six-sided fair die in private (under a cup or at a remote corner of the room) and are promised a payoff according to the outcome of the roll (e.g., 1, 2, 3, 4, 5 or 6 dollars for the corresponding die number rolled) which they report to the experimenter. While the die-under-the-cup task provides incentives for dishonest over-reporting of the actual die outcome, there is no way to identify dishonesty on the individual level. It is only possible to elucidate the aggregate level of dishonesty among subjects as a group by comparing the average reported outcome to the expected outcome of 3.5 in a fair die roll or the percentage of higher reported outcomes, such as 5 and 6, to their expected frequency of 16.7 percent. The present paper reports the results of running a variant of the standard die-under-the-cup experiment which enables to detect dishonesty on the individual level. Individual dishonesty is detected when one unknowingly reports an outcome which is entirely impossible. This made it possible to expose both the tendency to cheat and the size of cheating directly rather than statistically. Contrary to the standard die-under-the-cup task, subjects in our experiment are uncertain about the possible outcomes (other than the one they have actually rolled) and may rationally refrain from telling a lie which, if impossible, might result in embarrassment and denial of any payoff. However, the experiment reveals that a considerable fraction of subjects had no restraints telling an impossible lie even under a low incentive level, whereas doubling the incentive significantly increased the percentage of liars as well as the average size of the lie. Under both incentive levels, a substantial fraction of subjects lied to (what seemed to be) the maximum extent possible. These findings are in sharp contrast with the experimental literature on dishonest behaviour which concludes that people cheat just a little bit and that the modest level of cheating is insensitive to the reward from cheating.