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Uncertainty resolution in tax experiments: Why waiting for an audit increases compliance

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  • Muehlbacher, Stephan
  • Mittone, Luigi
  • Kastlunger, Barbara
  • Kirchler, Erich

Abstract

Tax compliance in a between-subjects experiment was higher when the uncertainty about the occurrence of an audit was not resolved until three weeks after participants had filed their tax returns than in a control treatment with immediate uncertainty resolution. Results have important implications for experimental tax research where providing immediate feedback whether participants are audited is common practice.

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File URL: http://www.sciencedirect.com/science/article/pii/S1053535712000091
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 41 (2012)
Issue (Month): 3 ()
Pages: 289-291

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Handle: RePEc:eee:soceco:v:41:y:2012:i:3:p:289-291

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Tax compliance; Tax experiments; Audits; Uncertainty resolution;

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References

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  1. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
  2. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  3. R. Cookson, 2000. "Framing Effects in Public Goods Experiments," Experimental Economics, Springer, vol. 3(1), pages 55-79, June.
  4. Luigi Mittone, 2002. "Dynamic behaviours in tax evasion. An experimental approach," CEEL Working Papers 0203, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  5. Loewenstein, George, 1987. "Anticipation and the Valuation of Delayed Consumption," Economic Journal, Royal Economic Society, vol. 97(387), pages 666-84, September.
  6. Joseph G. Eisenhauer, 2006. "Audit Lags and Taxpayer Compliance: A Simple Intertemporal Model," The Journal of Economics, Missouri Valley Economic Association, vol. 32(2), pages 45-59.
  7. John List & Todd Cherry, 2000. "Learning to Accept in Ultimatum Games: Evidence from an Experimental Design that Generates Low Offers," Experimental Economics, Springer, vol. 3(1), pages 11-29, June.
  8. Andreoni, James, 1992. "IRS as loan shark tax compliance with borrowing constraints," Journal of Public Economics, Elsevier, vol. 49(1), pages 35-46, October.
  9. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
  10. Toke Ward Petersen, 2004. "General Equilibrium Tax Policy with Hyperbolic Consumers," Computational Economics, Society for Computational Economics, vol. 23(2), pages 105-120, 03.
  11. Friedland, Nehemiah & Maital, Shlomo & Rutenberg, Aryeh, 1978. "A simulation study of income tax evasion," Journal of Public Economics, Elsevier, vol. 10(1), pages 107-116, August.
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Citations

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Cited by:
  1. Dai, Zhixin & Hogarth, Robin M. & Villeval, Marie Claire, 2014. "Ambiguity on Audits and Cooperation in a Public Goods Game," IZA Discussion Papers 7932, Institute for the Study of Labor (IZA).
  2. Zhixin Dai & Robin M. Hogarth & Marie Claire Villeval, 2014. "Ambiguity on audits and cooperation in a public goods game," Working Papers 1403, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  3. Zhixin Dai & Robin M. Hogarth & Marie Claire Villeval, 2014. "Ambiguity on audits and cooperation in a public goods game," Working Papers halshs-00944500, HAL.

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