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Cheating, Emotions, and Rationality: An Experiment on Tax Evasion

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Author Info

  • Giorgio Coricelli

    (ISC - Institut des Sciences Cognitives - CNRS : UMR5015 - Université Claude Bernard - Lyon I)

  • Matteus Joffily

    (ISC - Institut des Sciences Cognitives - CNRS : UMR5015 - Université Claude Bernard - Lyon I)

  • Claude Montmarquette

    (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal)

  • Marie Claire Villeval

    ()
    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I)

Abstract

The economics-of-crime approach usually ignores the emotional cost and benefit of cheating. In this paper, we investigate the relationships between emotions, deception, and rational decision-making by means of an experiment on tax evasion. Emotions are measured by skin conductance responses and self-reports. We show that the intensity of anticipated and anticipatory emotions before reporting positively correlates with both the decision to cheat and the proportion of evaded income. The experienced emotional arousal after an audit increases with the monetary sanctions and the arousal is even stronger when the evader's picture is publicly displayed. We also find that the risk of a public exposure of deception deters evasion whereas the amount of fines encourages evasion. These results suggest that an audit policy that strengthens the emotional dimension of cheating favors compliance.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00462067.

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Date of creation: 2010
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Publication status: Published, Experimental Economics, 2010, 13, 2, 226-247
Handle: RePEc:hal:journl:halshs-00462067

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00462067
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Keywords: deception ; tax evasion ; emotions ; physiological measures ; experiment;

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References

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  1. Timothy N. Cason & Lata Gangadharan, 2004. "An Experimental Study of Compliance and Leverage in Auditing and Regulatory Enforcement," Department of Economics - Working Papers Series 918, The University of Melbourne.
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