The ghost of institutions past: History as an obstacle to fighting tax evasion?

Christian Koch, Aaron Kamm, Nikos Nikiforakis

Publications: Contribution to journalArticlePeer Reviewed


Can a history of evasion affect tax compliance after a major institutional reform? We address this question in a novel laboratory experiment varying the quality of past and present institutions. We find that past institutions continue to exert considerable influence on individuals’ expectations about others’ compliance even after a major, common-knowledge institutional change. Consequently, we observe low compliance in good-quality institutions when there is a history of evasion, but high compliance when there is no such history. These findings suggest that history should not be ignored as it is in traditional models of compliance: the higher evasion has been historically, the stronger incentives may need to be to overcome the “ghost of institutions past”. We show that a society-wide poll in which individuals express their attitudes toward compliance can help break the link with the past.
Original languageEnglish
Article number103641
Number of pages17
JournalEuropean Economic Review
Publication statusPublished - Feb 2021

Austrian Fields of Science 2012

  • 502045 Behavioural economics


  • CMI
  • Cat2
  • Experiment
  • Tax evasion
  • Interdependence
  • Multiple equilibria
  • Path dependence

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