The economic crisis during the COVID-19 pandemic has a negative effect on tax compliance: Results from a scenario study in Austria.

In a scenario study with 1200 Austrian taxpayers, we examined how tax compliance is affected by the economic crisis related to the COVID-19 pandemic. Moreover, we investigated the potential of trust in government, attitude towards taxes, and justice perceptions in mitigating potential effects. The results suggest a strong effect of the economic environment on tax compliance. Specifically, tax compliance was lower in scenarios where the pandemic had a negative effect on the economy than in scenarios with no negative effect. However, for individuals with a positive attitude towards taxes, compliance was not lower in a negative economic environment than in pre-COVID-19 times. Moreover, we found that taxpayers who were not affected economically, taxpayers with a positive attitude towards taxes, and taxpayers with a low propensity to take risks generally indicated higher levels of tax compliance. Exploratory analyses indicate that taxpayers who change their compliance behavior in response to the economic environment are, on average, younger, less educated, more strongly affected economically, and more uncertain about their current economic situation than taxpayers with stable compliance levels. Policy interventions should target these groups to strengthen tax compliance in times of crisis.

Oxytocin promotes altruistic punishment.

The role of neuromodulators in the enforcement of cooperation is still not well understood. Here, we provide evidence that intranasal applied oxytocin, an important hormone for modulating social behavior, enhances the inclination to sanction free-riders in a social dilemma situation. Contrary to the notion of oxytocin being a pro-social hormone, we found that participants treated with oxytocin exhibited an amplification of self-reported negative social emotions such as anger towards free-riders, ultimately resulting in higher magnitude and frequency of punishment of free-riders compared to placebo. Furthermore, we found initial evidence that oxytocin contributes to the positive effects of a punishment institution by rendering cooperation preferable in the oxytocin condition for even the most selfish players when punishment was available. Together, these findings imply that the neural circuits underlying altruistic punishment are partly targeted by the oxytonergic system and highlight the importance of neuromodulators in group cohesion and norm enforcement within social groups.

The Detrimental Effects of Oxytocin-Induced Conformity on Dishonesty in Competition.

Justifications may promote unethical behavior because they constitute a convenient loophole through which people can gain from immoral behavior and preserve a positive self-image at the same time. A justification that is widely used is rooted in conformity: Unethical choices become more permissible because one's peers are expected to make the same unethical choices. In the current study, we tested whether an exogenous alteration of conformity led to a lower inclination to adhere to a widely accepted norm (i.e., honesty) under the pressure of competition. We took advantage of the well-known effects of intranasally applied oxytocin on affiliation, in-group conformity, and in-group favoritism in humans. We found that conformity was enhanced by oxytocin, and this enhancement had a detrimental effect on honesty in a competitive environment but not in a noncompetitive environment. Our findings contribute to recent evidence showing that competition may lead to unethical behavior and erode moral values.

Are groups more rational than individuals? A review of interactive decision making in groups.

Many decisions are interactive; the outcome of one party depends not only on its decisions or on acts of nature but also on the decisions of others. Standard game theory assumes that individuals are rational, self-interested decision makers-that is, decision makers are selfish, perfect calculators, and flawless executors of their strategies. A myriad of studies shows that these assumptions are problematic, at least when examining decisions made by individuals. In this article, we review the literature of the last 25 years on decision making by groups. Researchers have compared the strategic behavior of groups and individuals in many games: prisoner's dilemma, dictator, ultimatum, trust, centipede and principal-agent games, among others. Our review suggests that results are quite consistent in revealing that group decisions are closer to the game-theoretic assumption of rationality than individual decisions. Given that many real-world decisions are made by groups, it is possible to argue that standard game theory is a better descriptive model than previously believed by experimental researchers. We conclude by discussing future research avenues in this area. WIREs Cogn Sci 2012, 3:471-482. doi: 10.1002/wcs.1184 For further resources related to this article, please visit the WIREs website.