Truth, trust, and sanctions: On institutional selection in sender-receiver games

This paper reports on a laboratory experiment which investigates the impact of in- stitutions and institutional choice in constant-sum sender-receiver games. We compare individual sender and receiver behavior in two different institutions: A sanction-free in- stitution which is given by the bare sender-receiver game and a sanctioning institution which in addition offers the receiver the opportunity to (costly) sanction the sender after receiving feedback on the senders private information. We conduct the experiment in two phases: First, individuals are randomly assigned to an institution, and second they can choose the institution themselves.