Taxpayers Attitudes Toward Risk and Amnesty Participation: Economic Analysis and Evidence for the Italian Case

This paper provides a simple mode l, based on expected utility theory, far rationalizing taxpayer's reaction to an unexpected amnesty offer. The model is estimated through a deterministic approach, with reference to data pertaining to the 1991 and 19941talian tax amnesties. Results seem sound and suggest that standard critiques to the use of expected utility theory for describing taxpayer behavior do not apply when participation in amnesties is considered. However, the modelfails in explaining the behavior offull compliers (who refuse the amnesty). Their behavior can be better rationalized by resorting to the expected utility with rank dependent probability approach.