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Why whistleblowing does not deter collaborative tax evasion

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  • Burgstaller, Lilith
  • Pfeil, Katharina

Abstract

Does whistleblowing deter rule violations when such violations are believed to be common? We examine this question in an online experiment about collaborative tax evasion. We vary whether subjects can blow the whistle on their partner in crime and introduce a high-evasion environment by framing the social norm such that evasion is expected to be common. Our findings show that giving partners in crime the option to blow the whistle on their partner does not significantly deter collaborative tax evasion. Collaborative tax evasion significantly increases in a high-evasion environment compared to an unspecified norm environment, even when whistleblowing is possible. This finding underlines that the norm environment is crucial for evasion and corroborates that whistleblowing is ineffective when both partners benefit from collaborative evasion. We offer several explanations for these findings.

Suggested Citation

  • Burgstaller, Lilith & Pfeil, Katharina, 2024. "Why whistleblowing does not deter collaborative tax evasion," Freiburg Discussion Papers on Constitutional Economics 24/3, Walter Eucken Institut e.V..
  • Handle: RePEc:zbw:aluord:305289
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    More about this item

    Keywords

    Collaborative Tax Evasion; Social Norm; Peer Reporting; Whistleblowing; Online Experiment;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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