Tax Evasion and Social Interactions

Bernard Fortin (), Guy Lacroix and Marie Claire Villeval

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Abstract: The paper extends the standard tax evasion model by allowing for social interactions. In Manski's (1993) nomenclature, our model takes into account endogenous interactions, i.e., social conformity effects, exogenous interactions, i.e., fairness effects, and correlated effects. Our model is tested using experimental data. Participants must decide how much income to report given individual and group tax rates and audit probabilities, and given a feedback on theother members' reporting behavior. Myopic and self-consistent expectations are considered in the analysis. In the latter case, the estimation is based on a two-limit simultaneous tobit with fixed group effects. A unique social equilibrium exists when the model satisfies coherency conditions. In line with Brock and Durlauf (2001b), the intrinsic nonlinearity between individual and group responses helps identify the model. Our results provide evidence of fairness effects but reject social conformity.

Keywords: laboratory experiments; simultaneous Tobit; social interactions; tax evasion (search for similar items in EconPapers)
Date: 2007
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00238448
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Citations: View citations in EconPapers (265)

Published in Journal of Public Economics, 2007, 91 (11-12), pp. 2089-2112

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Related works:
Journal Article: Tax evasion and social interactions (2007)
Working Paper: Tax Evasion and Social Interactions (2005)
Working Paper: Tax Evasion and Social Interactions (2004)
Working Paper: Tax Evasion and Social Interactions (2004)
Working Paper: Tax Evasion and Social Interactions (2004)
Working Paper: Tax Evasion and Social Interactions (2004)
Working Paper: Tax Evasion and Social Interactions (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00238448

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