Deception Choice and Audit Design - The Importance of Being Earnest

Tim Lohse, Kai Konrad and Salmai Qari

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We study deception choices and deception detection in a tax compliance experiment. We find large systematic differences in individual deception abilities. Tax payers are conscious about their own deception abilities. The empirical outcomes are in line with a theory suggesting that tax payers make their choices whether to underreport or report truthfully on the basis of their own deception ability. Tax payers with high deception ability are more likely to underreport. This selection effect is stronger if the fines for underreporting are higher. These results provide an (additional) reason why random audits are superior to audits based on discretionary choice.

JEL-codes: C91 H31 K42 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-acc, nep-exp, nep-iue and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100577

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