Communication in context: Interpreting promises in an experiment on competition and trust

Significance Does competition increase deception? Competition is likely to induce inflated promises, but are these promises believed, and are they followed through? We argue that the question requires care in the definition of deception. We report on an experiment where competition does indeed inflate promises, but the promises are neither believed literally nor discarded. Bigger promises are interpreted by both sides as signals of equitable intentions, without being meant or read literally. Behavior does not follow the letter of the promise, but we argue that the deviation is not perceived as deception—the language code has changed. Analyses of competition, deception, and trust need to take into account the shared understanding of the message itself. How much do people lie, and how much do people trust communication when lying is possible? An important step toward answering these questions is understanding how communication is interpreted. This paper establishes in a canonical experiment that competition can alter the shared communication code: the commonly understood meaning of messages. We study a sender–receiver game in which the sender dictates how to share $10 with the receiver, if the receiver participates. The receiver has an outside option and decides whether to participate after receiving a nonbinding offer from the sender. Competition for play between senders leads to higher offers but has no effect on actual transfers, expected transfers, or receivers’ willingness to play. The higher offers signal that sharing will be equitable without the expectation that they should be followed literally: Under competition “6 is the new 5.”