EconPapers    
Economics at your fingertips  
 

The Bomb-Crater Effect of Tax Audits: Beyond Misperception of Chance

Luigi Mittone, Fabrizio Panebianco () and Alessandro Santoro

No 583, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: In this paper, we run a laboratory experiment where the information set is relatively rich, and, in particular, it includes audits on other taxpayers. At the same time, the implementation of the Bayesian updating process for the subjective probability to be audited is fairly simple. By doing so, we are able to elicit a range of consistent but heterogeneous probability beliefs and to distinguish between Bayesian and non-Bayesian subjects. We obtain two major results concerning Bayesian subjects. First, they exhibit strong and robust short-run BoCE. Second, they are seemingly not affected by audits on other taxpayers in their compliance decision. These results are robust to different definitions of Bayesianity and to different specifications. They confl ict with the evidence that Bayesian agents do perceive correctly the chance to be audited. In turn, this suggests that existing explanations of the BoCE are not entirely satisfactory and that alternative theories, possibly based on the Duality approach, are needed. KEYWORDS: Bomb-crater effect, Bayesian Updating, Behavioral Duality. JEL CODES: C91,D81,H26

Date: 2016
New Economics Papers: this item is included in nep-acc, nep-cbe, nep-exp, nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link)
ftp://ftp.igier.unibocconi.it/wp/2016/583.pdf (application/pdf)

Related works:
Journal Article: The bomb-crater effect of tax audits: Beyond the misperception of chance (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:igi:igierp:583

Ordering information: This working paper can be ordered from
http://www.igier.unibocconi.it/en/papers/index.htm

Access Statistics for this paper

More papers in Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University via Rontgen, 1 - 20136 Milano (Italy).
Bibliographic data for series maintained by ().

 
Page updated 2021-01-26
Handle: RePEc:igi:igierp:583