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

  • 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)

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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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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  18. 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.
  19. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
  20. 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.
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  26. 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.
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