Dubious Versus Trustworthy Faces - What Difference Does it Make for Tax Compliance?

12 Pages Posted: 4 Sep 2013

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Tim Lohse

Berlin School of Economics and Law; Max Planck Institute for Tax Law and Public Finance

Salmai Qari

German Institute for Economic Research (DIW Berlin); Berlin School of Economics and Law

Date Written: August 30, 2013

Abstract

We find experimental evidence that the decision problem of tax compliance changes if subjects’ declarations are not randomly assessed, but is based on their appearance as captured by pictures of their faces, even if the aggregate audit probability does not change. Some subjects may fear that their picture looks rather dubious whereas others may believe that their picture looks more trustworthy than average. Depending on these beliefs, they may adjust their compliance decisions. Our experimental design allows to disentangle these potentially countervailing effects.

Keywords: compliance, tax evasion, face picture, audit probability

JEL Classification: H260, C910, H310

Suggested Citation

Konrad, Kai A. and Lohse, Tim and Qari, Salmai, Dubious Versus Trustworthy Faces - What Difference Does it Make for Tax Compliance? (August 30, 2013). CESifo Working Paper Series No. 4373, Available at SSRN: https://ssrn.com/abstract=2319853

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

Tim Lohse

Berlin School of Economics and Law ( email )

Badensche Strasse 50-51
Berlin, D-10825
Germany

HOME PAGE: http://www.hwr-berlin.de/en/prof/tim-lohse

Max Planck Institute for Tax Law and Public Finance

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/public_economics/research_affiliates/tim_lohse.cfm

Salmai Qari

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Berlin School of Economics and Law ( email )

Badensche Strasse 50-51
Berlin, D-10825
Germany

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