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Cheating, emotions, and rationality: an experiment on tax evasion

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Abstract

The economics-of-crime approach usually ignores the emotional cost and benefit of cheating. In this paper, we investigate the relationships between emotions, deception, and rational decision-making by means of an experiment on tax evasion. Emotions are measured by skin conductance responses and self-reports. We show that the intensity of anticipated and anticipatory emotions before reporting income positively correlates with both the decision to cheat and the proportion of evaded income. The experienced emotional arousal after an audit increases with the monetary sanctions and the arousal is even stronger when the evader’s picture is publicly displayed. We also find that the risk of a public exposure of deception deters evasion whereas the amount of fines encourages evasion. These results suggest that an audit policy that strengthens the emotional dimension of cheating favors compliance.

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Authors and Affiliations

  1. Centre de neurosciences cognitives, CNRS, 67, boulevard Pinel, 69675, Bron Cedex, France

    Giorgio Coricelli & Mateus Joffily

  2. IPUB, Federal University of Rio de Janeiro, Av. Venceslau Brás, 71, 22290-140, Rio de Janeiro, Brazil

    Mateus Joffily

  3. CIRANO, Université de Montréal, 2020 University Street, Montreal, H3A 2A5, Quebec, Canada

    Claude Montmarquette

  4. Université de Lyon, Lyon, 69007, France

    Marie Claire Villeval

  5. GATE, CNRS, 93, Chemin de Mouilles Ecully, Ecully Cedex, 69130, France

    Marie Claire Villeval

  6. IZA, Bonn, Germany

    Marie Claire Villeval

  7. CCP, Aarhus, Denmark

    Marie Claire Villeval

Authors
  1. Giorgio Coricelli
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  2. Mateus Joffily
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  3. Claude Montmarquette
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  4. Marie Claire Villeval
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Corresponding author

Correspondence to Marie Claire Villeval.

Additional information

This research was supported by a grant from the Rhône-Alpes Region (CIBLE program).

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Coricelli, G., Joffily, M., Montmarquette, C. et al. Cheating, emotions, and rationality: an experiment on tax evasion. Exp Econ 13, 226–247 (2010). https://doi.org/10.1007/s10683-010-9237-5

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  • DOI: https://doi.org/10.1007/s10683-010-9237-5

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