ABSTRACT
This paper uses the laboratory experiment to examine the effect of whistleblowing in the context of tax evasion when individual income level is private information. According to the experimental result, it shows that the whistleblowing mechanism effectively mitigates tax evasion.
Acknowledgments
The author thanks two anonymous referees’ comments and suggestions. The author also thanks Liang-Lin Pan for help in running the experiment. Financial support is provided by the National Taipei University (110HA1902).
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 The criteria and basis for the classification of risk preference strictly follows Dave et al. (Citation2010). Please refer to pages 224–225 in Dave et al. (Citation2010).
2 It is about USD 9.12.
3 Let represent subject i’s declared income and
be the average declared income of other group members, positive deviation is defined as
and absolute negative deviation is defined as
.