Mind Your Decisions

How to Use Lies for Good, or Why Honesty Isn’t the Best Policy

image source: karindalziel via flickr

Every Tuesday is a Game theory article at Mind Your Decisions

Whoever said “honesty is the best policy” had to be lying. Lies have saved many messengers from being shot, and many couples from explosive arguments about body image (“Honey, do I look fat in this? Tell me the truth…”).

There’s certainly much to be said about honesty as a moral principle. I encourage you to be as honest as you’re comfortable with.

The problem is that we don’t live in theory—we need to asses matters practically. And in this light, game theory suggests that lies can be beneficial to all parties. In many cases, a policy of occasionally lying is more effective than a policy of strict honesty.

The reason is that lies can paradoxically make the truth more convincing. I want to discuss three examples of effective lies to illustrate.

Effective Lie #1: “Give me a lower rate or I’m canceling!”

There are some picky customers that seek perfection, the so-called “rate-chasers.” Most of us are content to pay a reasonable price for good service, and that means paying a little extra to avoid the hassle of switching to an imperfect competitor.

Most customers are lying when they claim they’ll cancel. The truth is they want a lower rate, but how can they make it possible?

A customer could list all the reasons a lower rate is beneficial for both sides. The business avoids customer acquisition costs. The customer doesn’t have to change service.

But these truths aren’t enough to convince a business. And so the honest reasons need to be emphasized by the dishonest threat of leaving.

I’ve had several calls where I’ve threatened to cancel and the agent knew it was a hollow threat. Nonetheless, the lie was a good enough threat and I was able to get a good discount.

Effective Lie #2: “I’ll never be with you—ever!”

My friend in college was crushed. Things were going so well with the woman he was courting. They had gone to a few movies and dinners and there were signals on both sides.

But things fell apart when he wanted to make it official. She was stunned at the situation and really not interested in him.

They had “the talk” where she indicated her interest was friendly and not romantic. And she even went further and told him that she’d never be with him—ever. It was this last statement that particularly bothered my friend, as it gave him no hope.

He vented his feelings with me and I was thinking about how to make him feel better. How could I get him out of the rut?

At the time, a two-part idea struck me.

–First, I wanted to show him there was hope. It is inconceivable the woman really would never want to be with him. If they really were a good match, time would work it out.

–Second, I wanted him to make the best response. The lie wasn’t really meant to crush him, but it rather served as a signal that he should stop pursuing her. His best strategy would be to move on and find someone better.

Why was I so sure the woman was lying? I told my friend that she had to be lying because she can’t predict the future. There are thousands of stories and movies about women that change feelings about men. People change over time. She couldn’t possibly predict the person she would be in a few years, so how can she claim to never be interested in him?

And that brings the next question: why did she lie in the first place? The reason is that the lie made the truth more convincing. She had already told my friend she wasn’t interested. But such a statement isn’t strong enough to stop most guys. And that’s where the lie served its purpose.

Besides, what was her alternative? If she told him that she could see them together in the future, then she would be sending too optimistic a message. She needed to lie about the future to ensure my friend stopped going after her in the present.

Here’s my summary of it all: take heart if you’re rejected, but know your best response is usually to move on.

Effective Lie #3: “If you don’t listen to me, I’m calling my lawyer and talking to the press.”

Some people pursue lawsuits and talk to the media. But not most. This is another case where a dishonest threat is used to prop an honest demand.

I’ve heard a lot of people say this to companies. It’s usually after a series of interactions of poor customer service. Most people learn that honesty only gets you so far.

My friend had received a defective phone from a wireless company. He sent it back to them. He got a letter indicating that the phone suffered water damage and it that was not under warranty. This was made up as there was no water damage.

When my friend called and pleaded his case, he was shut down. He didn’t have much leverage because the company was in possession of the phone. None of his honest attempts were working.

And so my friend sneakily figured out how to contact a top ranking executive (as I described in my previous newsletter). He threatened to talk to his lawyer and the press.

He had absolutely no intention of doing so—it would have cost him a lot of money and time. He would rather pay up a few dollars to get a working phone.

But the lie was effective at making the truth get through. The company quickly issued him an apology and compensated him for the hassle.

I don’t know anyone that has pursued legal action, and yet the threat keeps businesses honest.

Related reading

The Ultimatum Game and the Hollywood Strike—how threats and punishment relate

How to Rob a Store and Get Away with It—Bizop News on threats in the Prisoner’s Dilemma

The Grammer Dilemma— pratiksrandomwalk on improving British public schools and how the threat of private schools changes incentives

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