This paper adds to the economic-psychological research on tax compliance by experimentally testing a simple auditing rule that induces strategic uncertainty among taxpayers. Under this rule, termed the bounded rule, taxpayers are informed of the maximum number of audits by a tax authority, so that the audit probability depends on the joint decisions among the taxpayers. We compare the bounded rule to the widely studied ‡at-rate rule, where taxpayers are informed that they will be audited with a constant probability. The experimental evidence shows that, as theoretically predicted, the bounded rule induces the same level of compliance as the ‡at-rate rule when strategic uncertainty is low, and a higher level of compliance when strategic uncertainty is high. The bounded rule also suppresses the "bomb crater"e¤ect often observed in prior studies. The results suggest that strategic uncertainty due to interactions among taxpayers could be an e¤ective device to deter tax evasion.
This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link:
This is the unspecified version of the paper.This version of the publication may differ from the final published version. Permanent repository link: ABSTRACTThe advantage of multiple sourcing to protect against supplier failures arising from undependable products due to latent defects is examined using a model with non-linear external failure costs. Prior research has focused only on supplier failures arising from unreliable supply, such as late/insufficient/no delivery. I derive a closed-form characterization of the optimal production quota allocation for the LUX (Latent defect-Undependable product-eXternal failure) setting. The allocation determines the optimal supply base, with intuitive properties that hold under a mild requirement. The requirement includes the special case of equal procurement costs charged by suppliers but also allows unequal costs without any particular order. The key result of the paper is a necessary and sufficient condition determining whether single or multiple sourcing is optimal. Another condition is obtained to determine the exact size of the optimal supply base, provided the mild requirement holds. With minor modifications, the results also hold when a buyer-initiated procurement contract can be used to elicit private information on the suppliers' unit variable production costs. (Keywords: Supplier selection, latent defects, quality cost, total cost of purchasing; JEL L22, L24, M11, M21, M40)
This paper adds to the economic-psychological research on tax compliance by experimentally testing a simple auditing rule that induces strategic uncertainty among taxpayers. Under this rule, termed the bounded rule, taxpayers are informed of the maximum number of audits by a tax authority, so that the audit probability depends on the joint decisions among the taxpayers. We compare the bounded rule to the widely studied ‡at-rate rule, where taxpayers are informed that they will be audited with a constant probability. The experimental evidence shows that, as theoretically predicted, the bounded rule induces the same level of compliance as the ‡at-rate rule when strategic uncertainty is low, and a higher level of compliance when strategic uncertainty is high. The bounded rule also suppresses the "bomb crater"e¤ect often observed in prior studies. The results suggest that strategic uncertainty due to interactions among taxpayers could be an e¤ective device to deter tax evasion.
Objectives: (1) To develop a useful tool to measure food, alcohol and tobacco items; (2) to document the availability of these items in Almaty, Kazakstan; (3) to describe the relationship between consumption and availability; and (4) to identify possible relationships between availability and health outcomes in the city and region. Design: A survey of 648 vendors in Almaty, Kazakstan was conducted over one month from December 1999 to January 2000. Vendors identified which items they sold from a list of 61 food, alcohol and tobacco items. Setting: Vendors were approached in three of the six regions of Almaty, Kazakstan. Regions canvassed included Auzov, one of the three 'sleeping regions'; Medeo, one of the two downtown regions; and Turksib, a more suburban/rural area of the city. Results: There was a significant correlation between alcohol and cigarette consumption and availability. The relative availability of items was numerically and spatially consistent throughout the city. Fruits and vegetables occurred infrequently (, 20% of sites) and in relative isolation from the rest of the system, while candy and cigarettes occurred with a higher relative frequency (75-80% of sites). Maps of vendors showed clusters around geographical features such as major roads and intersections. Conclusions: Combining a checklist and mapping tools provides a model of consumer item availability that can help identify priorities for public health and urban planning professionals. The wide availability of cigarettes, alcohol, candy, coffee and tea, and limited availability of fruits, vegetables and whole grains, is likely to support increasing rates of chronic disease in Almaty.
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