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on Informal and Underground Economics |
| By: | Janis Zickfeld (Aarhus University [Aarhus]); Karolina Scigala (Aarhus University [Aarhus]); Christian Elbaek (Aarhus University [Aarhus]); John Michael; Mathilde Tønning Tønnesen (Aarhus University [Aarhus]); Gabriel Levy; Shahar Ayal; Isabel Thielmann; Laila Nockur; Eyal Peer; Valerio Capraro; Rachel Barkan; Simen Bø; Štěpán Bahník; Daniele Nosenzo (Aarhus University [Aarhus]); Ralph Hertwig; Nina Mazar; Alexa Weiss; Ann-Kathrin Koessler; Ronit Montal-Rosenberg; Sebastian Hafenbrädl; Yngwie Asbjørn Nielsen (Aarhus University [Aarhus]); Patricia Kanngiesser; Simon Schindler; Philipp Gerlach; Nils Köbis; Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Marek Albert Vranka; Dan Ariely; Jareef Martuza; Yuval Feldman; Michal Bialek; Jan Kristian Woike; Zoe Rahwan; Alicia Seidl; Eileen Chou; Agne Kajackaite; Simeon Schudy; Ulrich Glogowsky; Anna Czarna; Stefan Pfattheicher (Aarhus University [Aarhus]); Panagiotis Mitkidis (Aarhus University [Aarhus]) |
| Abstract: | Dishonest behaviors such as tax evasion impose significant societal costs. Ex-ante honesty oaths—commitments to honesty before action—have been proposed as useful interventions to counteract dishonest behavior, but the heterogeneity in findings across operationalizations calls their effectiveness into question. We tested 21 honesty oaths (including a baseline oath)—proposed, evaluated, and selected by 44 expert researchers—and a no-oath condition in a megastudy in which 21, 506 UK and US participants played an incentivized tax evasion game. Of the 21 interventions, 10 significantly improved tax compliance by 4.5 to 8.5 percentage points, with the most successful nearly halving tax evasion. Limited evidence for moderators was found. Experts and laypeople failed to predict the most effective interventions, but experts' predictions were more accurate. In conclusion, honesty oaths can be effective in curbing dishonesty but their effectiveness varies depending on content. These findings can help design impactful interventions to curb dishonesty. |
| Keywords: | honesty oath, dishonesty, tax compliance, nudging, unethical behavior |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-04555561&r=iue |
| By: | Matej Lorko; Tomas Miklanek; Maros Servatka |
| Abstract: | While nudges have recently gained popularity, many nudging interventions fail, and the effects of successful ones are often short-lived. We conjecture that the success of a nudge depends on how it interacts with the underlying economic incentives that determine the payoffmaximizing behavior of the decision-maker. For example, in the domain of tax compliance, a nudge is likely to be effective only if it is financially optimal for the taxpayer to pay the tax. To test our conjecture, we run a multi-period experiment in which we manipulate tax audit probability, and nudge participants to report their income. In addition, we vary how often the nudge appears, to test whether more frequent nudging increases long-run compliance. We observe that the first application of a nudge has a positive immediate effect on income reporting irrespective of whether it is optimal to comply or not. However, subsequent nudges increase income reporting only if the nudge is aligned with the taxpayer’s incentives. More frequent nudging in the direction opposite to incentives yields no effects on long-run compliance. Policy implications are discussed. |
| Keywords: | nudge, incentives, tax compliance, experiment |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp777&r=iue |
| By: | Lucie Letrouit (Université Gustave Eiffel); Harris Selod (World Bank Group) |
| Abstract: | We present an urban land use model with land tenure insecurity and information asymmetry regarding risks of contested land ownership, a very common issue in West African cities. A market failure emerges as sellers do not internalize the impact of their market participation decision on the average quality of traded plots, which in turn affects other sellers and buyers' decisions. The equilibrium is suboptimal and has too many transactions of insecure plots and too few transactions of secure plots. This market failure can be addressed when agents trade along trusted kinship lines that discourage undisclosed sales of insecure plots. Such kinship matching is an important feature of West African societies, including on the market for informal land, as illustrated by a unique survey administered in Bamako, Mali. In the model, the extent to which the market failure is addressed increases with the intensity of kinship ties. When sellers also have the possibility of registering their property right in a cadastre, this not only further attenuates information asymmetry but also helps reduce risk. We find complementarity between kinship matching and registration: As transactions along trusted kinship lines tend to involve plots that are more secure on average, kinship matching makes registration better targeted at insecure plots traded outside kinship ties. In this context, a partial registration fee subsidy can bring the economy to the social optimum. |
| Keywords: | Land markets, Property rights, Information asymmetry, Informal land use, Land registration, Ethnic kinship, Marchés fonciers, Droits de propriété, Asymétrie d'information, Enregistrement des terrains, Cousinage ethnique |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04525074&r=iue |