How Does Trust Affect Concessionary Behavior in Tax Bargaining?

Eva Eberhartinger, Raffael Speitmann, Caren Sureth-Sloane and Yuchen Wu

FinanzArchiv: Public Finance Analysis, 2022, vol. 78, issue 1-2, 112-155

Abstract: We study the bargaining behavior between auditor and auditee in a tax setting and scrutinize the effect of interpersonal trust and trust in government on both parties' concessions. We find evidence that both kinds of trust affect the concessionary behavior, albeit in different ways. While trust in government affects concessionary behavior in line with intuitive predictions, we find that interpersonal trust only affects tax auditors. For high interpersonal trust, the alleviating effect of high trust in government on tax auditors' concessions is less pronounced. Our findings help tax authorities to shape programs to enhance compliance in an atmosphere of trust.

Keywords: behavioral taxation; concessionary behavior; interpersonal trust; tax audit; trust in government (search for similar items in EconPapers)
JEL-codes: C92 D91 H20 H25 H83 M40 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1628/fa-2022-0002

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