ABSTRACT
In this chapter, the authors report the results of a series of tax 'experiments' that were undertaken with various groups of people in Turkey in 1998. Economists have assumed that the tax declaration decision is made in conditions of uncertainty, by taxpayers who are rational, amoral expected utility maximisers. The data used to analyse the tax declaration decision have been obtained from a series of tax 'experiments' conducted with Turkish citizens. The basic design of experiments in the tax evasion literature has been similar. In M.G. Allingham and A. Sandmo's original theoretical analysis of income tax evasion, the predicted effect of a change in the income tax rate was ambiguous and depended upon the relative sizes of the income and substitution effects. The 'theory' of income tax evasion predicts that evasion would increase as income rose, provided that individuals have decreasing absolute risk aversion.
