Commitment to tax compliance: Timing effect on willingness to evade |
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Affiliation: | 1. Banque de France, International Macroeconomics Division, 31 rue Croix des Petits Champs, 75001 Paris, France;2. University of Bristol, Priory Road complex, BS1 8TU Bristol, UK |
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Abstract: | Experimental and empirical literature on individual decision-making has shown a remarkable difference between planning and ongoing decisions: when asked to plan their actions, people overweight events with low probability; on the contrary, in ongoing decisions, they tend to ignore them. We report on a laboratory experiment designed to explore the presence of this decisional inconsistency in taxpayers’ behavior, by means of a commitment system for compliance. In line with the overweighting of events with small probabilities (i.e. fiscal audits), we find that planning induces the majority of people not only to adopt a mechanism of commitment to tax compliance, but also to actually comply. |
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Keywords: | Tax-evasion Planning-Ongoing Gap Risk preferences |
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