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Tax Evasion: Cheating Rationally or Deciding Emotionally?

Listed author(s):
  • Giorgio Coricelli

    (ISC - Institut des Sciences Cognitives - CNRS - UCBL - Université Claude Bernard Lyon 1)

  • Mateus Joffily

    (ISC - Institut des Sciences Cognitives - CNRS - UCBL - Université Claude Bernard Lyon 1)

  • Claude Montmarquette

    (Université de Montréal - Département de Sciences Economique - Université de Montréal)

  • Marie Claire Villeval

    ()

    (GATE - Groupe d'analyse et de théorie économique - CNRS - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines)

The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance.

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Paper provided by HAL in its series Post-Print with number hal-00196332.

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Date of creation: 2007
Publication status: Published in Working paper GATE 2007-24. 2007
Handle: RePEc:hal:journl:hal-00196332
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00196332
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  2. Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
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  4. Bayer, Ralph-C & Sutter, Matthias, 2009. "The excess burden of tax evasion--An experimental detection-concealment contest," European Economic Review, Elsevier, vol. 53(5), pages 527-543, July.
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  12. Spicer, Michael W. & Thomas, J. Everett, 1982. "Audit probabilities and the tax evasion decision: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 2(3), pages 241-245, September.
  13. Blumenthal, Marsha & Christian, Charles W. & Slemrod, Joel, 2001. "Do Normative Appeals Affect Tax Compliance? Evidence from a Controlled Experiment in Minnesota," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 125-38, March.
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  17. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
  18. Bosco, Luigi & Mittone, Luigi, 1997. "Tax Evasion and Moral Constraints: Some Experimental Evidence," Kyklos, Wiley Blackwell, vol. 50(3), pages 297-324.
  19. Torgler, Benno, 2002. " Speaking to Theorists and Searching for Facts: Tax Morale and Tax Compliance in Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 657-683, December.
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