The Effect of Temporary Changes and Expectations on Individuals' Decisions: Evidence from a Tax Compliance Setting

• 成果类型: Article
• 署名作者: Austin, Chelsea Rae; Bobek, Donna D.; LaMothe, Ethan G.
• 署名单位: University of South Carolina System; University of South Carolina Columbia; State University System of Florida; University of Central Florida
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52525
• 发表日期: 2020
• 页码: 33-58
• 关键词: PROSPECT-THEORY; taxpayer compliance; evasion; rates; determinants; perceptions; adaptation; domain; frames

摘要

Based on prospect theory's value function, we predict how reference points adapt to influence individuals' tax evasion choices during and after experiencing temporary tax changes. Results from a multi-round experiment indicate reactions to temporary changes depend jointly on the direction of the change and expectations. Specifically, individuals experiencing a tax increase evade more while the increase is in effect. More interestingly, knowing, versus not knowing, a tax decrease is temporary prevents an increase in evasion after the temporary change expires, and may lead individuals to reduce evasion during the change. In a supplemental condition, we induce uncertainty by repeatedly extending a tax decrease. We find when uncertainty is introduced, both benefits of knowing the temporal nature of the decrease are lost. Overall results are consistent with individuals failing to adapt to a loss state and adapting quickly to a gain state unless they are certain the gain state is temporary.