Social esteem versus social stigma: The role of anonymity in an income reporting game

• Published in: Journal of economic behavior & organization Vol. 124; pp. 55 - 66
• Main Authors: Casal, Sandro, Mittone, Luigi
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-04-2016; Elsevier Sequoia S.A
• Subjects: Anonymity; Compliance; Evasion; Experimental economics; Game theory; Incentives; Income taxes; Monetary incentives; Non-monetary (dis)incentives; Shame; Stigma; Studies; Tax evasion; Taxation; Willingness to pay; Anonymity; Non-monetary (dis)incentives; Experimental economics; Tax evasion
• ISSN: 0167-2681; 1879-1751
• DOI: 10.1016/j.jebo.2015.09.014

•The disclosure of identities to the onslaught of public opinion prevents tax evasion.•Negative, rather than positive, non-monetary incentives better sustain tax compliance.•In case of evasion, individual anonymity is valued more than others anonymity.
This paper aims at experimentally testing the role of different non-monetary (dis)incentives on tax compliance. Participants were subjected to different experimental conditions where the role played by anonymity differed. As expected, anonymity does play an important role in the decision to pay taxes. In addition, we found that a negative non-monetary incentive increases tax compliance more effectively than a positive non-monetary incentive. We also found that the effect of these non-monetary incentives is mitigated when too much information is made available. Results show that, when evasion is made public, tax fraudsters are willing to pay in order to keep their dishonest behaviour undisclosed and to avoid public shame. Interestingly we found a misalignment on the impact of stigmatization, namely that the judgement of an individual's evasion is perceived, by the individual, more harshly than a judgement made by the said individual regarding evasion carried out by other parties.