We theoretically and experimentally study the influence of producers’ honesty on consumers’ purchasing decisions. In a competitive market, producers can save wage costs by lying to their workers. Our treatments vary consumers’ observability of within-firm honesty. We show that when producers’ honesty is fully transparent, honesty provides a competitive advantage: Despite higher production costs, honest firms make higher profits than dishonest firms. A robustness treatment demonstrates that this result is driven by honesty concerns and not by fairness towards the workers. Our findings extend the literature on consumer social responsibility by adding firms’ honesty as an important decision criterion in consumer choice.