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“Optimal Honesty” in the Context of Fiscal Crimes

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  • Lory Barile

    (Department of Economics, Faculty of Social Sciences, University of Warwick, Gibbet Hill Road, Coventry CV4 7AL, UK)

  • John Cullis

    (Department of Economics, Faculty of Humanities and Social Sciences, University of Bath, Claverton Down, Bath BA2 7AY, UK)

  • Philip Jones

    (Department of Economics, Faculty of Humanities and Social Sciences, University of Bath, Claverton Down, Bath BA2 7AY, UK)

Abstract

This paper begins by contrasting the caricatures ‘ homo and femina economicus ’ with ‘ homo and femina realitus ’. Against this backdrop, the paper considers three ‘apparently falsified’ empirical predictions of the standard expected utility model of individual decision-making concerning participation in fiscal crimes: that tax evasion and benefit fraud can be treated identically; fiscal crimes should be endemic; and that all individuals, depending on parameter values, should be either honest or dishonest. A utility function relating to decisions with a moral dimension is used to offer insight into the rationalization of the predictions and involves defining an individual’s ‘optimal honesty’ in the context of fiscal crimes. The policy implications of the approach are briefly explored.

Suggested Citation

  • Lory Barile & John Cullis & Philip Jones, 2024. "“Optimal Honesty” in the Context of Fiscal Crimes," Economies, MDPI, vol. 12(9), pages 1-11, September.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:9:p:242-:d:1475831
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    References listed on IDEAS

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    6. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    7. Gordon, James P. P., 1989. "Individual morality and reputation costs as deterrents to tax evasion," European Economic Review, Elsevier, vol. 33(4), pages 797-805, April.
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    Cited by:

    1. Lory Barile & John Cullis & Philip Jones, 2025. "“Ain’t that a shame”: moral costs and fiscal crimes," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.

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