Dhami, Sanjit; al-Nowaihi, Ali - Department of Economics, Leicester University - 2003
's cumulative prospect theory. The model predicts empirically plausible magnitudes of tax evasion despite low audit probabilities …, intuitive, and factual, but is contrary to the prediction made by expected utility theory. Furthermore, the optimal tax rates … predicted by prospect theory, in the presence of tax evasion behaviour, are consistent with actual tax rates. …
