Truth-telling and the regulator. Experimental evidence from commercial fishermen

Abstract

Understanding what determines the truth-telling of economic agents towards their regulator is of major economic importance from banking to the management of common-pool resources such as European fisheries. By enacting a discard-ban on unwanted fish-catches without increasing monitoring activities, the European Union (EU) depends on fishermen s truth-telling. Using a coin-tossing task in an artefactual mail field experiment with 120 German commercial fishermen, we test whether truth-telling in a baseline setting differs from behavior in two treatments that exploit fishermen s widespread ill-regard of their regulator, the EU. We find, first, that fishermen misreport coin tosses more strongly to their advantage in a treatment where they are faced with the EU flag, and, second, that misreporting is consistent with behavior in other hidden tasks. We also find some supportive evidence for our first result in a conceptual replication with 1200 UK citizens who voted ‘leave’ in the Brexit referendum. Our findings imply that lying is more extensive towards an ill-regarded regulator and that policy needs to account for this endogenously eroding honesty base.