Income taxes and risky investment decisions an experiment on behavioral tax biases by Martin Fochmann and Kristina Hemmerich
By: Fochmann, Martin
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Contributor(s): Hemmerich, Kristina.
Material type: 
ArticlePublisher: 2018Subject(s): IMPUESTOS | POLITICA FISCAL | INVERSIONES | RIESGO | TOMA DE DECISIONESOnline resources: Click here to access online
In:
Journal of Institutional and Theoretical Economics: JITE v. 174, n. 4, December 2018, p. 651-688Summary: We design a controlled experiment to examine investment behavior when a proportional income tax (with and without full loss offset) is introduced. Our design enables us to disentangle tax effects predicted by standard neoclassical theory and behavioral tax biases that cannot be predicted by this theory. We observe that investment behavior can be heavily distorted by behavioral tax biases and is consequently inconsistent with theoretical predictions. However, if we isolate these effects, we find support for the theory. We argue that the unpredicted behavior is a result of a tax-induced cognitive load variation.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 1533/2018/4-1 (Browse shelf) | Available | OP 1533/2018/4-1 |
Disponible también en formato electrónico a través de la Biblioteca del IEF.
Resumen.
Bibliografía.
We design a controlled experiment to examine investment behavior when a proportional income tax (with and without full loss offset) is introduced. Our design enables us to disentangle tax effects predicted by standard neoclassical theory and behavioral tax biases that cannot be predicted by this theory. We observe that investment behavior can be heavily distorted by behavioral tax biases and is consequently inconsistent with theoretical predictions. However, if we isolate these effects, we find support for the theory. We argue that the unpredicted behavior is a result of a tax-induced cognitive load variation.
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