Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93257
Authors: 
Doerrenberg, Philipp
Duncan, Denvil
Zeppenfeld, Christopher
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Paper 7917
Abstract: 
This paper examines whether risk-taking in a lottery depends on the opportunity to respond to the lottery outcome through additional labor effort and/or tax evasion. Previous empirical attempts to answer this question face identification issues due to self-selection into jobs that facilitate tax evasion and labor effort flexibility. We address these identification issues using a laboratory experiment (N = 180). Subjects have the opportunity to invest earned income in a lottery and, depending on randomly assigned treatment states, have the opportunity to respond to the lottery outcome through evasion and/or extra labor effort. We find strong evidence that ex-post access to labor opportunities reduces ex-ante risk willingness while access to tax evasion has no effect on risk behavior. We discuss possible explanations for this result based on the existing literature.
Subjects: 
tax evasion
labor supply
risk behavior
lab experiment
JEL: 
G11
H21
H24
H26
J22
Document Type: 
Working Paper

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