Tax Evasion: Cheating Rationally or Deciding Emotionally?

Claude Montmarquette, Giorgio Coricelli (), Mateus Joffily () and Marie Claire Villeval
Additional contact information
Mateus Joffily: CNRS, Centre des Neurosciences Cognitives,Bron, F-69500, France

No 724, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance.

Keywords: emotions; experiment; neuro-economics; physiological measures; shame; tax evasion (search for similar items in EconPapers)
JEL-codes: C91 C92 D87 H26 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
ftp://ftp.gate.cnrs.fr/RePEc/2007/0724.pdf (application/pdf)

Related works:
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
Working Paper: Tax Evasion: Cheating Rationally or Deciding Emotionally? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0724

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