Journal article

The ghost of institutions past: History as an obstacle to fighting tax evasion?

Aaron Kamm, Christian Koch, Nikos Nikiforakis

European Economic Review | ELSEVIER | Published : 2021


Can a history of evasion affect tax compliance after a major institutional reform? We address this question in a novel laboratory experiment varying the quality of past and present institutions. We find that past institutions continue to exert considerable influence on individuals’ expectations about others’ compliance even after a major, common-knowledge institutional change. Consequently, we observe low compliance in good-quality institutions when there is a history of evasion, but high compliance when there is no such history. These findings suggest that history should not be ignored as it is in traditional models of compliance: the higher evasion has been historically, the stronger incen..

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University of Melbourne Researchers