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Taxpayers Attitudes Toward Risk and Amnesty Participation: Economic Analysis and Evidence for the Italian Case

  • Marchese, Carla

    ()

  • Privileggi, Fabio

    ()

This paper provides a simple model, based on expected utility theory, for rationalizing taxpayer's reaction to an unexpected amnesty offer. The model is estimated through a deterministic approach, with reference to data pertaining to the 1991 and 1994 Italian tax amnesties. Results seem sound and suggest that standard critiques to the use of expected utility theory for describing taxpayer behavior do not apply when participation in amnesties is considered. However, the model fails in explaining the behavior of full compliers (who refuse the amnesty). Their behavior can be better rationalized by resorting to the expected utility with rank dependent probability approach.

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File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/fatot.pdf
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Paper provided by Institute of Public Policy and Public Choice - POLIS in its series POLIS Working Papers with number 6.

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Length: 14 pages
Date of creation: Jul 1999
Date of revision:
Handle: RePEc:uca:ucapdv:6
Contact details of provider: Web page: http://polis.unipmn.it

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  1. Weber, Warren E, 1970. "The Effect of Interest Rates on Aggregate Consumption," American Economic Review, American Economic Association, vol. 60(4), pages 591-600, September.
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  8. Cassone, Alberto & Marchese, Carla, 1995. "Tax Amnesties as Special Sales Offers: The Italian Experience," Public Finance = Finances publiques, , vol. 50(1), pages 51-66.
  9. Siegel, Frederick W & Hoban, James P, Jr, 1982. "Relative Risk Aversion Revisited," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 481-87, August.
  10. Bernasconi, Michele, 1998. "Tax evasion and orders of risk aversion," Journal of Public Economics, Elsevier, vol. 67(1), pages 123-134, January.
  11. John H. Cochrane & Lars Peter Hansen, 1992. "Asset Pricing Explorations for Macroeconomics," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 115-182 National Bureau of Economic Research, Inc.
  12. Loehman, Edna, 1998. "Testing risk aversion and nonexpected utility theories," Journal of Economic Behavior & Organization, Elsevier, vol. 33(2), pages 285-302, January.
  13. Schram, Arthur, 2000. " Sorting Out the Seeking: The Economics of Individual Motivations," Public Choice, Springer, vol. 103(3-4), pages 231-58, June.
  14. Farber, Henry S, 1978. "Individual Preferences and Union Wage Determination: The Case of the United Mine Workers," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 923-42, October.
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