institute for humanities and cultural studies Journal of Iranian Economic Issues 2383-0565 3 1 2016 09 11 The effects of Governments Lies on Welfare The effects of Governments Lies on Welfare 85 104 2431 FA ناصر یارمحمدیان دانشجوی دکتری اقتصاد، دانشگاه اصفهان محمد میرزایی کارشناس ارشد برنامه‌ریزی سیستم‌‌‌‌‌‌های اقتصادی، دانشگاه صنعتی اصفهان مژگان معلمی استادیار دانشگاه پیام نور مجید فاضلی کارشناس ارشد مدیریت MBA، دانشگاه مالتی مدیای مالزی Journal Article 2016 06 01 Since lying, like every other mankind behavior, is a result of negative and positive motivations, it is possible to analyze it through economics, because economics is the science of motivations and rationalities. Lie is the dictation of a false belief, aimed at deceiving people in any possible way. Someone who lies expects short-run benefits from lying, because this action like other actions of human beings has its own costs and benefits. For example the lair knows that the lie is going to be revealed after some times and so will cost him/her inevitably, but expecting short-run benefits, he/she decides to lie. Lie decreases trust accumulation, increases transaction cost in market, and results in inefficient equilibrium, which all reduce welfare. This paper reviews the literature concerning the economics of lying and shows how lying leads to destructing social capital, undermining institution functions, increasing transaction cost and asymmetric information. Finally it is shown that lying about the rate of inflation, reduces economic welfare. <br /><br /><br /> Since lying, like every other mankind behavior, is a result of negative and positive motivations, it is possible to analyze it through economics, because economics is the science of motivations and rationalities. Lie is the dictation of a false belief, aimed at deceiving people in any possible way. Someone who lies expects short-run benefits from lying, because this action like other actions of human beings has its own costs and benefits. For example the lair knows that the lie is going to be revealed after some times and so will cost him/her inevitably, but expecting short-run benefits, he/she decides to lie. Lie decreases trust accumulation, increases transaction cost in market, and results in inefficient equilibrium, which all reduce welfare. This paper reviews the literature concerning the economics of lying and shows how lying leads to destructing social capital, undermining institution functions, increasing transaction cost and asymmetric information. Finally it is shown that lying about the rate of inflation, reduces economic welfare. <br /><br /><br /> http://economics.ihcs.ac.ir/article_2431_be294e66f65519325ce8e734f1cae762.pdf