On the relationship between information and individuals' perception in affecting income tax evasion

Ludovica Spinola ()
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Ludovica Spinola: Department of Economics, Ca' Foscari University of Venice

No 2023:04, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: We experimentally test how information about the number of caught tax evaders, by interacting with individuals' prior beliefs, affect the decision to underreport taxes. Specifically, our results indicate that when individuals receive the information about the number of people caught evading taxes and perceive this as higher than prior beliefs, they evade less. When, instead, individuals consider the number of caught evaders as low with respect to their beliefs, they evade more. These findings suggest that when subjects are informed on how many people have been found evading taxes they infer the audit probability, rather than the tax evasion rate. Finally, we observe no salience bias effect when considering individuals to whom we highlighted information about others' norm violation nor when looking at those to whom we emphasised the probability of being audited.

Keywords: tax evasion; social information; audit probability; salience bias; laboratory experiment (search for similar items in EconPapers)
JEL-codes: D83 D9 H2 H26 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2023
New Economics Papers: this item is included in nep-acc, nep-eur, nep-exp, nep-iue, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ven:wpaper:2023:04

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