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Uncertainty resolution in tax experiments: Why waiting for an audit increases compliance

Author

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  • Muehlbacher, Stephan
  • Mittone, Luigi
  • Kastlunger, Barbara
  • Kirchler, Erich

Abstract

Tax compliance in a between-subjects experiment was higher when the uncertainty about the occurrence of an audit was not resolved until three weeks after participants had filed their tax returns than in a control treatment with immediate uncertainty resolution. Results have important implications for experimental tax research where providing immediate feedback whether participants are audited is common practice.

Suggested Citation

  • Muehlbacher, Stephan & Mittone, Luigi & Kastlunger, Barbara & Kirchler, Erich, 2012. "Uncertainty resolution in tax experiments: Why waiting for an audit increases compliance," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 289-291.
    • Handle: RePEc:eee:soceco:v:41:y:2012:i:3:p:289-291
    DOI: 10.1016/j.socec.2012.01.006
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    References listed on IDEAS

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    1. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    2. Mittone, Luigi, 2006. "Dynamic behaviour in tax evasion: An experimental approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 813-835, October.
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    7. R. Cookson, 2000. "Framing Effects in Public Goods Experiments," Experimental Economics, Springer;Economic Science Association, vol. 3(1), pages 55-79, June.
    8. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
    9. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    10. Joseph G. Eisenhauer, 2006. "Audit Lags and Taxpayer Compliance: A Simple Intertemporal Model," Journal of Economic Insight, Missouri Valley Economic Association, vol. 32(2), pages 45-59.
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    Citations

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    Cited by:

    1. Kogler, Christoph & Mittone, Luigi & Kirchler, Erich, 2016. "Delayed feedback on tax audits affects compliance and fairness perceptions," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 81-87.
    2. Pántya, József & Kovács, Judit & Kogler, Christoph & Kirchler, Erich, 2016. "Work performance and tax compliance in flat and progressive tax systems," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 262-273.
    3. Anthony M. Evans & Christoph Kogler & Willem W. A. Sleegers, 2021. "No effects of synchronicity in online social dilemma experiments: A registered report," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(4), pages 823-843, July.
    4. repec:cup:judgdm:v:16:y:2021:i:4:p:823-843 is not listed on IDEAS
    5. Dai, Zhixin & Hogarth, Robin M. & Villeval, Marie Claire, 2015. "Ambiguity on audits and cooperation in a public goods game," European Economic Review, Elsevier, vol. 74(C), pages 146-162.
    6. James Alm & Antoine Malézieux, 2021. "40 years of tax evasion games: a meta-analysis," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 699-750, September.
    7. Aloys Prinz, 2019. "Learning (Not) to Evade Taxes," Games, MDPI, vol. 10(4), pages 1-18, September.
    8. Barbara Hartl & Eva Hofmann & Katharina Gangl & Martina Hartner-Tiefenthaler & Erich Kirchler, 2015. "Does the Sole Description of a Tax Authority Affect Tax Evasion? - The Impact of Described Coercive and Legitimate Power," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-19, April.

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    More about this item

    Keywords

    Tax compliance; Tax experiments; Audits; Uncertainty resolution;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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