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Customs compliance and the power of imagination

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Konrad, Kai A.; Lohse, Tim; Qari, Salmai

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract This paper studies the role of beliefs about own performance or appearance for compliance at the customs. In an experiment in which underreporting has a higher expected payoff than truthful reporting we find: a large share, about 15-20 percent of the subjects, is more compliant if they have reason to imagine that their performance influences their subjective audit probability. In contrast, we do not find evidence for individuals who believe that by their personal performance they can reduce the subjective probability for an audit. Our results suggest that the power of imagination, i.e. the role of second-order beliefs in the process of customs declarations is important and may potentially be used to improve customs and tax compliance. (author's abstract)
Keywords duty; tax law; probability; achievement; control
Classification Public Finance
Document language English
Publication Year 2011
City Berlin
Page/Pages 29 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Schwerpunkt Märkte und Politik, Forschungsprofessur und Projekt The Future of Fiscal Federalism, SP II 2011-108
Status Published Version; reviewed
Licence Deposit Licence - No Redistribution, No Modifications