Information acquisition and misreporting: a research note

For their strategic and operational decision making, managers often need to rely on information reported by their subordinates. However, these subordinates sometimes have incentives to misreport information. We examine whether the process through which employees acquire the information they need to report affects the likelihood that they selfishly misreport this information to their manager. We argue that employees are more likely to misreport information that they chose to collect compared to information that they were endowed with, and that this difference will be larger if acquiring the information requires costly effort. The reason is that as the information acquisition process becomes more convoluted, employees will find it easier to come up with benevolent explanations for their misstated reports, which reduces the psychological costs of misreporting. Using a lab experiment, we find no effect of information acquisition discretion on misreporting, but we do find that information acquisition effort increases misreporting.