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Imperfect Decision-Making and the Tax Payer Puzzle


  • Schmidtchen, Dieter
  • Kirstein, Roland


Even if the expected punishment on tax evasion is negligible, empirical studies show that actual tax evasion is smaller than rational choice models predict. In addition to this, tax payer do not respond on parameter changes as predicted. Some authors tried to explain this puzzle by assuming "tax morale". Our paper models tax payers as imperfect decision-makers and explains deviations from the optimal solution by making use of a weaker assumption: The imperfect tax payer's decision to deviate from a given rule depends on their competence and on the complexity of their situation.

Suggested Citation

  • Schmidtchen, Dieter & Kirstein, Roland, 1997. "Imperfect Decision-Making and the Tax Payer Puzzle," CSLE Discussion Paper Series 97-01, Saarland University, CSLE - Center for the Study of Law and Economics.
  • Handle: RePEc:zbw:csledp:9701

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    References listed on IDEAS

    1. Koboldt, Christian, 1995. "Intellectual Property and Optimal Copyright Protection," CSLE Discussion Paper Series 95-01, Saarland University, CSLE - Center for the Study of Law and Economics.
    2. Novos, Ian E & Waldman, Michael, 1984. "The Effects of Increased Copyright Protection: An Analytic Approach," Journal of Political Economy, University of Chicago Press, vol. 92(2), pages 236-246, April.
    3. Landes, William M & Posner, Richard A, 1989. "An Economic Analysis of Copyright Law," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 325-363, June.
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    Cited by:

    1. Torgler, Benno, 2003. "To evade taxes or not to evade: that is the question," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(3), pages 283-302, July.
    2. Benno Torgler, 2003. "Tax Morale, Rule-Governed Behaviour and Trust," Constitutional Political Economy, Springer, vol. 14(2), pages 119-140, June.

    More about this item


    tax compliance; bounded rationality; imperfect decision-making; detection skill; rule-governed behavior;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law


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