Why pay taxes when no one else does?

Gil S. Epstein, Ira N. Gang

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

In this paper we try to understand the phenomenon whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders, and the number caught in previous periods. General conditions exist under which any expected utility maximizing potential tax evaders will decide to emulate other tax evaders.

Original languageEnglish
Pages (from-to)374-385
Number of pages12
JournalReview of Development Economics
Volume14
Issue number2
DOIs
StatePublished - May 2010

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