کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
884740 | 912412 | 2007 | 22 صفحه PDF | دانلود رایگان |
![عکس صفحه اول مقاله: Why do people pay taxes? Prospect theory versus expected utility theory Why do people pay taxes? Prospect theory versus expected utility theory](/preview/png/884740.png)
Using actual probabilities of audit and penalty rates, the return on evasion is 91–98%. So why do not most of us evade? Existing analysis, based on expected utility theory (EUT) is unable to explain this. Furthermore, and contrary to intuition and the bulk of evidence, EUT predicts that evasion should be decreasing in the tax rate (Yitzhaki puzzle). We apply Tversky and Kahneman’s [Tversky, A., Kahneman, D., 1992. Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty 5, 297–323] cumulative prospect theory to tax evasion. We show that prospect theory provides a much more satisfactory account of tax evasion including an explanation of the Yitzhaki puzzle. This also provides independent confirmation of prospect theory.
Journal: Journal of Economic Behavior & Organization - Volume 64, Issue 1, September 2007, Pages 171–192