Postgraduate Mini Course: Economics of Lies and Deception

Joel Sobel is a prominent Professor of Economics based at the University of California at San Diego, where he has worked for more than 40 years. He studies game theoretic models of communication and signaling. His work with Vincent Crawford established the game-theoretic concept of 'cheap talk'. He is interested in strategic communication. He has enjoyed extended leaves at many academic institutions Oxford, Caltech, UC Berkeley, UW Madison, Stanford, Barcelona, and Amsterdam/Rotterdam.

He was elected a Fellow of the Econometric Society in 1990; the American Academy of Arts and Sciences in 2010; and the Economic Theory Society in 2011. He is the recipient of Sloan and Guggenheim Foundation Fellowships. He has served as co-editor of the American Economic Review and served as editor of Econometrica, among other highly reputed journals in economics.

He earned an MA in economics and a PhD in Applied Mathematics at the University of California, Berkeley.

About the mini course, from Joel himself: Everyone knows what lying is, but there is no consensus on what constitutes a lie. Theoretical work requires precision. I’ll introduce ideas that I developed in Sobel [33] and Sobel [34]. I try to respect, but do not necessarily follow, the large philosophical literature on the topic. Some references: Mahon [25]’s technical survey and Bok [11]’s accessible mix of scholarly and popular perspectives. An experiment conducted by anthropologists (Coleman and Kay [13]). Augustine [7] is an influential historical source who provided a taxonomy. Even computer scientists have an opinion. The best treatment may come from a movie director (Morris [26] and [27]).

I am not aware of any formal definition and modeling of lies in economics, but perhaps I am searching too narrowly (see [5] and [6]).

Edmans is a book written by an economist for a broad audience. Akerlof and Shiller [1] and Edmans [15] are discussions of lying written by economists.

I define deception and relate the definition to the literature. In this segment of the class basic questions are: What is a lie? What is deceptive? Must lies be deceptive? What are the consequences of lies and deception? Is deception compatible with equilibrium?

(Some selections of the full list of) References (to be covered in the course):

[1] George A. Akerlof and Robert J. Shiller. Phishing for Phools: The Economics of Manipulation and Deception. Princeton University Press, 2015.

.....

[5] Dan Ariely. Predictably Irrational,: The Hidden Forces That Shape Our Decisions. Harper Perennial, 2010.

[6] Dan Ariely. The Honest Truth About Dishonesty: How We Lie to Everyone–Especially Ourselves. Harper Collins, 2012.

[7] Saint Augustine. De Mendacio, volume 3 of A Select Library of the Nicene and Post-Nicene Fathers of the Christian Church, pages 457–477. The Christian Literature Co., Buffalo, 1887.

...

[11] Sissela Bok. Lying: Moral Choice in Public and Private Life. Vintage, 1999.

...

[13] Linda Coleman and Paul Kay. Prototype semantics: The English word lie. Language, 57(1):26–44, March 1981.

...

[15] Alex Edmans. May contain lies: How stories, statistics, and studies exploit our biases—And what we can do about it. University of California Press, 2024.

...

[25] James Edwin Mahon. The definition of lying and deception. Stanford Encyclopedia of Philosophy, 2008.

[26] Errol Morris. Seven lies about lying, part I, 2009.

[27] Errol Morris. Seven lies about lying, part II, 2009.

...

[33] Joel Sobel. Lying and deception in games. Journal of Political Economy, 128(3):907–947, 2020.

[34] Joel Sobel. On the relationship between damage and deception. Technical report, UCSD, 2025.