Pinocchio's pupil: using eyetracking and pupil dilation to understand truth telling and deception in sender-receiver games

The results of experiments on sender-receiver games with an incentive for senders to exaggerate are analyzed. Eyetracking reveals that senders look at payoffs in a way that is consistent with a level-k model. A combination of sender messages and lookup patterns predicts the true state about twice as often as predicted by equilibrium.