Why whistleblowing does not deter collaborative tax evasion

Lilith Burgstaller and Katharina Pfeil

No 24/3, Freiburg Discussion Papers on Constitutional Economics from Walter Eucken Institut e.V.

Abstract: Does whistleblowing deter rule violations when such violations are believed to be common? We examine this question in an online experiment about collaborative tax evasion. We vary whether subjects can blow the whistle on their partner in crime and introduce a high-evasion environment by framing the social norm such that evasion is expected to be common. Our findings show that giving partners in crime the option to blow the whistle on their partner does not significantly deter collaborative tax evasion. Collaborative tax evasion significantly increases in a high-evasion environment compared to an unspecified norm environment, even when whistleblowing is possible. This finding underlines that the norm environment is crucial for evasion and corroborates that whistleblowing is ineffective when both partners benefit from collaborative evasion. We offer several explanations for these findings.

Keywords: Collaborative Tax Evasion; Social Norm; Peer Reporting; Whistleblowing; Online Experiment (search for similar items in EconPapers)
JEL-codes: D91 E26 H26 O17 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp, nep-iue, nep-law, nep-pbe, nep-pub and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:aluord:305289

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