Combining Psychology and Economics in the Analysis of Compliance: From Enforcement to Cooperation

In tax compliance research, there has been a significant shift in research paradigms,from an emphasis on enforcement to approaches that stress cooperation. In this paper, we trace this shift. We first describe the major “actors” in the tax compliance game and their complex interactions. Second, we examine various perspectives on the compliance decisions of individuals, starting with “economic” factors and then moving to factors based more on “psychology”, like social norms, fairness, and social interactions. Third, we present the “slippery slope” framework as a unifying framework. We conclude with recommendations based on this framework that have been shown to improve compliance.