Trust and reciprocity drive social common goods contribution norms

Tax evasion has negative effects on the national budget and suboptimal consequences for the general populace. The post-2008/09 world financial crisis era characterized by governmental bailouts, leverages tax compliance into a pressing issue of concern.  In times of overindebtedness, tax fraud bearing unfavorable societal costs has made the need for taxpayers’ compliance an unprecedented necessity. In the emergent field of tax psychology, the focus on regulating tax evasion recently shifted towards searching for situational cues that elicit common goal compliance. Trust and reciprocity are argued to steer a socially-favorable environment that supports social tax ethics norms. Experiments were staged in a North American university Decision Science Laboratory. An inbetween-subjects design, in which players persisted from game 1 (trust game) to game 2 (common good game) captured the impact of differing trust and reciprocity experiences – of rewarding and defecting outcomes – on subsequent common goods contributions. 256 participants played an economic trust game followed by a common goods game.  The experiments were conducted by personal computers supported by the software z-tree and Qualtrics.  The results found evidence for trust and reciprocity leading to individuals contributing to common goals. The more trust and reciprocity was practiced and experienced, the more common goals were supported – leveraging trust and reciprocity as interesting tax compliance antecedents. The results have widespread implications for governmental-citizen relations. Policy makers and public servants are advised to establish a service-oriented customer atmosphere with citizens breeding trust and reciprocity in order to reach common societal goals.

Keywords: Common goods game, Common goals compliance, Reciprocity, Tax ethics, Trust, Trust game, Tax Psychology