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Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment

Bergolo, Marcelo; Ceni, Rodrigo; Cruces, Guillermo; Giaccobasso, Matias; Perez-Truglia, Ricardo

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Marcelo Bergolo

Rodrigo Ceni

Matias Giaccobasso

Ricardo Perez-Truglia


The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with a tax authority to address this question. We sent letters to 20,440 small and medium-sized firms that collectively paid more than US$200 million in taxes per year. We find that providing information about audits significantly affected tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972).

Journal Article Type Article
Acceptance Date Jan 1, 2023
Online Publication Date Feb 1, 2023
Publication Date 2023-02
Deposit Date Feb 9, 2023
Publicly Available Date Feb 9, 2023
Journal American Economic Journal: Economic Policy
Print ISSN 1945-7731
Electronic ISSN 1945-774X
Publisher American Economic Association
Peer Reviewed Peer Reviewed
Volume 15
Issue 1
Pages 110-153
Keywords General Economics, Econometrics and Finance
Public URL
Publisher URL
Additional Information Copyright © 2023 AEA


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