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Shaping tax norms through lotteries

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  • Fabbri, Marco

Abstract

This work develops a theoretical framework for a behavioral policy against indirect tax evasion that is complementary to the classical deterrence approach. The policy provides incentives to customers in the form of lottery prizes in order to act as third-party tax enforcers. I argue that the policy introduction might successfully overcome the free-riding problem characterizing third-party tax enforcement. A theoretical model based on Tversky and Kahneman's (1992) Cumulative Prospect Theory is presented. The model states the necessary conditions for an effective policy implementation.

Suggested Citation

  • Fabbri, Marco, 2015. "Shaping tax norms through lotteries," International Review of Law and Economics, Elsevier, vol. 44(C), pages 8-15.
    • Handle: RePEc:eee:irlaec:v:44:y:2015:i:c:p:8-15
    DOI: 10.1016/j.irle.2015.07.002
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    Cited by:

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    3. Fatas, Enrique & Nosenzo, Daniele & Sefton, Martin & Zizzo, Daniel John, 2021. "A self-funding reward mechanism for tax compliance," Journal of Economic Psychology, Elsevier, vol. 86(C).
    4. M. Fabbri & P. N. Barbieri & M. Bigoni, 2016. "Ride Your Luck! A Field Experiment on Lottery-based Incentives for Compliance," Working Papers wp1089, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Marco Fabbri & Paolo Nicola Barbieri & Maria Bigoni, 2019. "Ride Your Luck! A Field Experiment on Lottery-Based Incentives for Compliance," Management Science, INFORMS, vol. 65(9), pages 4336-4348, September.

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