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Customs Compliance and the Power of Imagination

Listed author(s):
  • Kai A. Konrad
  • Tim Lohse
  • Salmai Qari

This paper studies the role of beliefs about own performance or appearance for compliance at the customs. In an experiment in which underreporting has a higher expected payoff than truthful reporting we find: a large share, about 15-20 percent of the subjects, is more compliant if they have reason to imagine that their performance influences their subjective audit probability. In contrast, we do not find evidence for individuals who believe that by their personal performance they can reduce the subjective probability for an audit. Our results suggest that the power of imagination, i.e. the role of second-order beliefs in the process of customs declarations is important and may potentially be used to improve customs and tax compliance.

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File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/Tax-MPG-RPS-2011-18.pdf
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Paper provided by Max Planck Institute for Tax Law and Public Finance in its series Working Papers with number customs_compliance_and_the_power_of_imagination.

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Length: 31 pages
Date of creation: Dec 2011
Handle: RePEc:mpi:wpaper:customs_compliance_and_the_power_of_imagination
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