LogFAQs > #942298451

There's 2 outcomes from that. If you hide, he finds his doll, but can't reach it. So you help him get it and he gives you the Amulet accessory. It's alright. It raises all your stats a little bit but lowers your speed.

If you get caught too many times, you have to fight him and he's kind of a challenging fight imo >_> But if you beat him, you get a Flower Box.

There's a similar minigame much later on towards the end of the game. But I don't think you get anything from fighting that boss, so it's more favorable to hide to get his accessory instead, even if it is kinda eh too
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https://imgur.com/7nfPhE2