Why should I comply with taxes if others don’t? Social information and behavioral convergence: An experimental study

This experimental study investigates the impact of social information about others’ tax behavior on individuals’ subsequent tax decisions. Two types of social information are introduced: (i) the average income reported within the subject’s entire group, and (ii) the average income reported within a reference subgroup made of either peers or non-peers and chosen by the subject. Our results show that social information significantly affects subsequent tax decisions, with a change in reported income ranging from 15% to 30% of total income on average. Moreover, the influence of whole-group information on tax behavior appears to be stronger than that of chosen-group information. Quite strikingly, a majority of subjects show more interest in the tax behavior of non-peers than in that of peers. Finally, our data provide strong evidence of behavioral convergence towards the average tax behavior of others.