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Tax Evasion with a Conscience

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Abstract

How do moral concerns affect tax compliance and the need for audits? We propose answers by exploring an inspection game, modified to incorporate belief-dependent taxpayer guilt, unawareness, and third-party audience effects. Novel conclusions are drawn regarding whose behavior is affected by moral concerns (it's the authority's more than the citizen's) and regarding policy, in particular fines vs. jail, the role of information campaigns, and the use of a principle of public access whereby tax returns are made public information.

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  • Dufwenberg, Martin & Nordblom, Katarina, 2018. "Tax Evasion with a Conscience," Working Papers in Economics 738, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0738
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    File URL: http://hdl.handle.net/2077/57486
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    Cited by:

    1. Pierpaolo Battigalli & Martin Dufwenberg, 2022. "Belief-Dependent Motivations and Psychological Game Theory," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 833-882, September.
    2. Attanasi, Giuseppe & Rimbaud, Claire & Villeval, Marie Claire, 2023. "Guilt aversion in (new) games: Does partners' payoff vulnerability matter?," Games and Economic Behavior, Elsevier, vol. 142(C), pages 690-717.
    3. Alm James & Barreto Raul A., 2024. "Trust in Government in a Changing World: Shocks, Tax Evasion, and Economic Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 24(1), pages 439-487, January.
    4. Pierpaolo Battigalli & Roberto Corrao & Martin Dufwenberg, 2019. "Incorporating Belief-Dependent Motivation in Games Abstract:Psychological game theory (PGT), introduced by Geanakoplos, Pearce & Stacchetti (1989) and significantly generalized by Battigalli & Dufwenb," Working Papers 642, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. Battigalli, Pierpaolo & Corrao, Roberto & Dufwenberg, Martin, 2019. "Incorporating belief-dependent motivation in games," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 185-218.
    6. Kaisa Kotakorpi & Satu Metsälampi & Topi Miettinen & Tuomas Nurminen, 2021. "The role of reporting institutions and image motivation in tax evasion and incidence," Working Papers 2133, Tampere University, Faculty of Management and Business, Economics.

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    More about this item

    Keywords

    tax evasion; guilt; inspection game; policy;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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