Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Traditional models of tax enforcement assume that the decision to be tax compliant is the result of an interaction between individual taxpayers and a dedicated tax agency. Evidence shows that tax compliance is the result of a far more complex decision rule, involving both individual and group motivations, along with non-monetary components. In this paper, we consider a game in which the individual decision to be tax compliant is affected both by strategic competition between taxpayers and the psychological cost of being detected (i.e., shame). We ran a laboratory experiment using a sample of 138 students at the Centro di Economia Sperimentale A Roma Est (CESARE) to evaluate the efficiency of random versus targeted audit rules and to verify the interaction between strategic competition and shame. The experimental results show that strategic competition between taxpayers plays a critical role in reducing tax evasion. In addition, shame reinforces this competition, but plays no significant role on its own (i.e., without competition).