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How Does Trust Affect Concessionary Behavior in Tax Bargaining?

Author

Listed:
  • Eva Eberhartinger
  • Raffael Speitmann
  • Caren Sureth-Sloane
  • Yuchen Wu

Abstract

We study the bargaining behavior between auditor and auditee in a tax setting and scrutinize the effect of interpersonal trust and trust in government on both parties' concessions. We find evidence that both kinds of trust affect the concessionary behavior, albeit in different ways. While trust in government affects concessionary behavior in line with intuitive predictions, we find that interpersonal trust only affects tax auditors. For high interpersonal trust, the alleviating effect of high trust in government on tax auditors' concessions is less pronounced. Our findings help tax authorities to shape programs to enhance compliance in an atmosphere of trust.

Suggested Citation

  • Eva Eberhartinger & Raffael Speitmann & Caren Sureth-Sloane & Yuchen Wu, 2022. "How Does Trust Affect Concessionary Behavior in Tax Bargaining?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 78(1-2), pages 112-155.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2022-0002
    DOI: 10.1628/fa-2022-0002
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    More about this item

    Keywords

    behavioral taxation; concessionary behavior; interpersonal trust; tax audit; trust in government;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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