• Institutional structure and the optimal level of lying

      Hiser, Rodney F.; Logan, Robert R. (1999)
      This study is an interdisciplinary comparative analysis of two institutional structures and their relation to lying. The author examines institutional structure through an institutional continuum with contrasting ideal-types at opposing ends. These ideal-types are the "private property order" and the "bureau." The author models lying as a benefit-cost analysis and examines lying through a two-person model of society called the "information relation." Using the information relation, he shows the problem of lying is an agency problem between the informer and the informee. In two separate analyses, the author evaluates the ideal-types' tendencies to either allow or hinder lying. In the first analysis, the author identifies seven protection-from-lying strategies and compares their necessary requirements to the institutional constraints of the ideal types. In the second analysis, the author examines six social phenomena, within the institutional context of each ideal type, that affect people's benefit-cost ratio of lying. The author concludes that there exists a positive correlation between the degree of central planning and the optimal level of lying, as seen from the point of view of each individual in society. The author argues that a movement on the continuum away from the private property order toward the bureau tends to (1) breakdown community relations, (2) provide incentive for society members to adopt value relativism, (3) change the nature of competition, (4) lower society's overall material standard of living, and (5) create a social environment of mutual self-deception. The author sees important implications in this study for the economics of information, theories of government regulation, and the sociology of science.