Effects of Institutional History and Leniency on Collusive Corruption and Tax Evasion

University of Zurich, Department of Economics, Working Paper No. 295

33 Pages Posted: 14 Aug 2018

See all articles by Johannes Buckenmaier

Johannes Buckenmaier

University of Zurich - Department of Economics

Eugen Dimant

University of Pennsylvania, Behavioral Ethics Lab

Luigi Mittone

University of Trento - Department of Economics and Management

Date Written: August 2018

Abstract

We investigate the effects of an institutional mechanism that incentivizes taxpayers to blow the whistle on collusive corruption and tax compliance. We explore this through a formal leniency program. In our experiment, we nest collusive corruption within a tax evasion framework. We not only study the effect of the presence of such a mechanism on behavior, but also the dynamic effect caused by the introduction and the removal of leniency. We find that in the presence of a leniency mechanism, subjects collude and accept bribes less often while paying more taxes, but there is no increase in bribe offers. Our results show that the introduction of the opportunity to blow the whistle decreases the collusion and bribe acceptance rate, and increases the collected tax yield. It also does not encourage bribe offers. In contrast, the removal of the institutional mechanism does not induce negative effects, suggesting a positive spillover effect of leniency that persists even after the mechanism has been removed.

Keywords: Collusive bribery, institutions, tax compliance, leniency, spillover

JEL Classification: C92, D02, D73, H26, K42

Suggested Citation

Buckenmaier, Johannes and Dimant, Eugen and Mittone, Luigi, Effects of Institutional History and Leniency on Collusive Corruption and Tax Evasion (August 2018). University of Zurich, Department of Economics, Working Paper No. 295. Available at SSRN: https://ssrn.com/abstract=3228415 or http://dx.doi.org/10.2139/ssrn.3228415

Johannes Buckenmaier (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

Eugen Dimant

University of Pennsylvania, Behavioral Ethics Lab ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://https://sites.google.com/site/eugendimant/

Luigi Mittone

University of Trento - Department of Economics and Management ( email )

Via Inama 5
Trento, I-38100
Italy

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