Framing effect and tax compliance

Ing. Valentina La Via

Master's thesis

Abstract:

The goal of the thesis is to investigate the psychological implication of the human behavior into the economics’ decisions, with interest for the taxation. For this reason, at the beginning the main theories about decision under uncertainty are presented. Then, it is presented the contribution of who start to suppose that people’s choice cannot be limited only to mathematical operation, but other variables play an important rule. An important contribution was given in this sense from the Prospect Theory, which introduced the concept of framing effect, showing that people fail sometimes in order to elaborate the information for the way in which the information are framed. This concept is, in the last part of the work, applied to the taxation. In order to explain this, previous theories about the tax system are presented.

Abstract:

The goal of the thesis is to investigate the psychological implication of the human behavior into the economics’ decisions, with interest for the taxation. For this reason, at the beginning the main theories about decision under uncertainty are presented. Then, it is presented the contribution of who start to suppose that people’s choice cannot be limited only to mathematical operation, but other variables play an important rule. An important contribution was given in this sense from the Prospect Theory, which introduced the concept of framing effect, showing that people fail sometimes in order to elaborate the information for the way in which the information are framed. This concept is, in the last part of the work, applied to the taxation. In order to explain this, previous theories about the tax system are presented.

Keywords

Expected utility, Prospect Theory, Framing effect, Loss aversion, Tax compliance, Tax evasion

Language used: English

Date on which the thesis was submitted / produced: 2. 4. 2019

Thesis defence

• Date of defence: 16. 4. 2019
• Supervisor: PhD Tommaso Reggiani
• Reader: Ing. Miloš Fišar, Ph.D.

Masaryk University

Faculty of Economics and Administration

Master programme / field:
Economic Policy and Administration / Public Economics and Administration (Eng.)