Lie detection: A strategic analysis of the verifiability approach

Published: American Law and Economics Review, 2022

Authors: Konstantinos Ioannidis, Theo Offerman, Randolph Sloof

Abstract: The Verifiability Approach is a lie detection method based on the insight that truth-tellers provide precise details whereas liars sometimes remain vague to avoid being exposed. We provide a game-theoretic foundation for the strategic effect that underlies this approach. We consider a speaker who wants to be acquitted and an investigator who prefers to find out the truth. The investigator can verify the speaker’s statement at some cost; verification gets more reliable the more details are provided. If, after a falsified statement, the investigator convicts, an additional penalty is imposed. Constructing precise but false statements is assumed to be cognitively costly. We derive all equilibria and thereby the conditions under which the investigator can infer valuable information from the speaker’s statement at face value. If cognitive costs are not prohibitively high, these require that liars are deterred from making false precise statements if always verified. Strategic information revelation by the speaker and verification by the investigator then necessarily work in tandem in a partially pooling equilibrium. Improvements in reliability result in more valuable information via the statements per se, whereas larger lying costs or a harsher penalty do not once the deterrence condition for the existence of this equilibrium is met.

Keywords: verbal deception detection methods, verifiability approach, strategic information revelation, cognitive lying costs

JEL codes: C72, D01, D82, K14

Presented at: 36^th Annual Conference of the European Association of Law and Economics (Tel Aviv, 2019), 12^th Annual Conference of the European Association of Psychology and Law (Santiago de Compostela, 2019), Statistics and Actuarial-Finance Mathematics Seminar (Samos, 2018), CBESS-CeDEx-CREED Annual Meeting (Norwich, 2018)