A group exhibits overconfidence if significantly more than half the group members declare to be better than the median in some characteristic. Overconfidence was found in verbal reports for a variety of characteristics and settings but was less often studied for choice behaviour. In an experiment we tested how perceived relative skill influences verbal and choice behaviour. Treatments varied task difficulty and payment. Choice behaviour changes from overconfidence to underconfidence when the task changes from easy and familiar to non-familiar. This effect is significant when monetary payments are at stake and weak when they are not.
Consumer borrowing is a highly topical and multifaceted phenomenon as well as a popular subject for study. We focus on consumer credit use and review the existing literature. To categorize what is known we identify four main psychological perspectives on the phenomenon: credit use as (1) a reflection of the situation, (2) a reflection of the person, (3) a cognitive process, and (4) a social process. On top of these perspectives we view credit use as a process that entails three distinct phases: (1) processes before credit acquisition, (2) processes at credit acquisition, and (3) processes after credit acquisition. We review the international literature along a two-tier structure that aligns the psychological perspectives with a process view of credit. This structure allows us to identify systematic concentrations as well as gaps in the existing research. We consolidate what is known within each perspective and identify what seems to be most urgently missing. Some of the most important gaps relate to research studying credit acquisition from the perspective of credit use as a reflection of the person or as a social process. In particular, research on credit use as a reflection of the person appears to focus exclusively on the first stage of the credit process. We conclude with a discussion that reaches across perspectives and identifies overarching gaps, trends, and open questions. We highlight a series of implicit linkages between perspectives and the geographical regions in which studies related to the perspectives were conducted. Beyond diagnosing a geographical imbalance of research, we argue for future research that systematically addresses interrelations between perspectives. We conclude with a set of global implications and research recommendations.
The slippery slope framework of tax compliance emphasizes the importance of trust in authorities as a substantial determinant of tax compliance alongside traditional enforcement tools like audits and fines. Using data from an experimental scenario study in 44 nations from five continents (N = 14,509), we find that trust in authorities and power of authorities, as defined in the slippery slope framework, increase tax compliance intentions and mitigate intended tax evasion across societies that differ in economic, sociodemographic, political, and cultural backgrounds. We also show that trust and power foster compliance through different channels:trusted authorities (those perceived as benevolent and enhancing the common good) register the highest voluntary compliance, while powerful authorities (those perceived as effectively controlling evasion) register the highest enforced compliance. In contrast to some previous studies, the results suggest that trust and power are not fully complementary, as indicated by a negative interaction effect. Despite some between-country variations, trust and power are identified as important determinants of tax compliance across all nations. These findings have clear implications for authorities across the globe that need to choose best practices for tax collection.
Information campaigns to increase tax compliance could be framed in different ways. They can either highlight the potential gains when tax compliance is high, or the potential losses when compliance is low. According to regulatory focus theory, such framing should be most effective when it is congruent with the promotion or prevention focus of its recipients. Two studies confirmed the hypothesized interaction effects between recipients' regulatory focus and framing of information campaigns, with tax compliance being highest under conditions of regulatory fit. To address taxpayers effectively, information campaigns by tax authorities should consider the positive and negative framing of information, and the moderating effect of recipients' regulatory focus. KeywordsRegulatory focus; Regulatory fit; Goal-framing; Tax compliance Tax payments represent a social dilemma with colliding individual and collective interests. The financial basis for effective political and economic activities of the government is solid as long as the state succeeds in motivating citizens to cooperate rather than to defect. If a majority of citizens engages in tax avoidance and evasion, provision of public goods and services is at risk (e.g., van Lange, Liebrand, Messick, & Wilke, 1992). Despite temptations to cheat, people in many countries keep up relatively high tax morale and seem to accept their duty to pay taxes (Braithwaite, 2003;James & Alley, 2002;. Nevertheless, "taxes" have a negative connotation, are associated with an expensive and inefficient management style of politicians and often linked not only to the loss of money but also -especially in the case of self-employment -to restrictions of personal freedom in deciding how to spend and invest one's "own" money (Kirchler, 1998). Information campaigns on taxes and spending policy of the government as well as the provision of public goods can improve both citizens' understanding and acceptance of taxes and their compliance. Tax compliance is likely to increase if the tax system is perceived as being transparent, fair, and trustworthy, and when tax knowledge increases (e.g., . This article examines the differential effectiveness of information campaigns. It is assumed Promoting tax compliance by information campaignsNeoclassical economics postulates that taxpayers consider audit probability and fines in case of tax evasion and comply with the law only if audits are likely and fines are high (Allingham & Sandmo, 1972). The effect of audits and fines has, however, often been disputed (e.g., Andreoni, Erard, & Feinstein, 1998) and without doubt there are other than purely rational-economic variables determining tax behaviour. Moreover, under some circumstances, audits and fines may have the opposite effects than expected (e.g., Eichenberger & Frey, 2002;. If the deterring effect of audits and fines is low, strategies which aim to promote tax compliance should be applied (Pommerehne & WeckHannemann, 1992). Cooperation with tax authorities could be promoted by various media. I...
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