Why Whistleblowing Does Not Deter Collaborative Tax Evasion

53 Pages Posted: 12 Mar 2024

See all articles by Lilith Burgstaller

Lilith Burgstaller

Walter Eucken Institute

Katharina Pfeil

Walter Eucken Institute; University of Freiburg

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.

Keywords: Collaborative Tax Evasion, Social Norm, Peer Reporting, Whistleblowing, Online Experiment

Suggested Citation

Burgstaller, Lilith and Pfeil, Katharina, Why Whistleblowing Does Not Deter Collaborative Tax Evasion. Available at SSRN: https://ssrn.com/abstract=4756452 or http://dx.doi.org/10.2139/ssrn.4756452

Lilith Burgstaller (Contact Author)

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-Württemberg D-79100
Germany

Katharina Pfeil

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-Württemberg D-79100
Germany

University of Freiburg ( email )

Freiburg
Germany

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