This paper employs two variants of the “mind game” to show how a subtle variation in the game's rules affects cheating. In both variants of the game, cheating is invisible because subjects make their choices purely in their minds. The only difference stems from the ordering of steps that...

This paper presents experimental evidence that tax compliance is path dependent. For given values of the audit probability and the fine for tax evasion, we compare the income declaration of subjects who faced a change in one of the two parameters to that of subjects who experienced no such...

We experimentally analyze three anti-tax-evasion mechanisms: (1) prefilling of deductions in tax returns, (2) restricting tax evasion opportunities by either disallowing or (3) limiting the deductibility of expenditures. We find that prefilling compared to blank forms reduces tax evasion....

Conditional audit rules are designed to achieve regulatory compliance with fewer inspections than required by random auditing. A regulator places individuals into audit pools that differ in probability of audit or severity of fine and specifies transition rules between pools. Future pool...

This chapter surveys the theory of the public enforcement of law—the use of governmental agents (regulators, inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. The theoretical core of the analysis addresses the following basic questions: Should...

This paper aims to formalise both the role of trust (in) and power (of) tax authorities as major determinants of tax compliance, and the interplay between trust and power and its influence on tax climate and overall tax compliance. Unlike the related literature that studies the role of the...

In movies and novels, tax havens are often settings for shady international deals; in practice, they are rather less flashy. Tax havens, also known as "offshore financial centers" or "international financial centers," are countries and territories that offer low tax rates and favorable...

The last few years have seen an international campaign to ensure that the world's financial and banking systems are "transparent," meaning that every actor and transaction within the system can be traced to a discrete, identifiable individual. I present an audit study of compliance with the...

This paper incorporates tax morale into a search and matching model of equilibrium unemployment, with on-the-job search, extended to both the irregular sector and entrepreneurship. Tax morale is modelled as a social norm for tax compliance which renders evasion costly. The moral cost of tax...

Using a novel dataset on 2012 tax inspections by the Hellenic Ministry of Finance in tourist and high economic activity areas in 13 regions in Greece we find significant evidence that the intensification of tax audits can induce tax compliance.