Tax Evasion: Cheating Rationally or Deciding Emotionally?

Giorgio Coricelli (), Mateus Joffily (), Claude Montmarquette and Marie Claire Villeval
Additional contact information
Mateus Joffily: CNRS

No 3103, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: tax evasion; emotions; neuro-economics; shame; physiological measures; experiments (search for similar items in EconPapers)
JEL-codes: C91 C92 D87 H26 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007-10
New Economics Papers: this item is included in nep-acc, nep-cbe, nep-exp, nep-neu, nep-pbe, nep-pub and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published - revised version published as "Cheating, Emotions, and Rationality: An Experiment on Tax Evasion" in: Experimental Economics, 2010, 13(2), 226-247

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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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