Wirtschaftswissenschaft
Michele Bernasconi, Alberto Zanardi
Tax Evasion, Tax Rates, and Reference Dependence
Jahrgang 60 (2004) / Heft 3, S. 422-445 (24)
Using cumulative prospect theory as a notable example of reference-dependent preference, we revisit the basic portfolio model of tax evasion. We show that some controversial implications of the standard expected-utility theory, including that of a negative relationship between tax rates and evaded income, can be corrected in a direction more consistent with intuition and empirical evidence.