We use a laboratory experiment to study the extent to which investors’ choices are affected by limited loss deduction in income taxation. We first compare investment behavior in the no tax baseline to a tax control setting, in which the income from investments is taxed. We find that investors...

In a controlled laboratory experiment, subjects had to fold letters in order to earn money. While the net income per letter was the same in the three treatments, the gross income varied and the tax rate was 0, 25% and 50%. Although work incentives should be the same in all treatments, subjects...

In a laboratory experiment that allows us to vary the taxation method while keeping the financial outcomes constant, we find clear evidence that aggregated income taxation (comparable to profit taxation) with complete loss deduction induces a sustained bias towards more risky investment...

We use a laboratory experiment to study the extent to which investors’ choices are affected by limited loss deduction in income taxation. We first compare investment behavior in the no tax baseline to a tax control setting, in which the income from investments is taxed. We find that investors...

We analyze the effect of income taxation with limited loss deduction on investment decisions. An experiment with five treatments was conducted, one without taxation as a reference and four with taxation and limited loss compensation. The participants' task was to repeatedly choose one out of two...

We conduct a framed field experiment with 245 employed persons (no students) as subjects and a real tax, which is levied on the subjects' income from working in our real effort task. In our first three treatments, the net wage is constant but gross wages are subject to different constant...

Entgegen den Annahmen der ökonomischen Standardtheorie zur Besteuerung stellen einige empirische Arbeiten fest, dass Individuen einer Steueraversion unterliegen. Unter dieser Form der Aversion wird in der Literatur die Bereitschaft verstanden, höhere Ausgaben zur Vermeidung von Steuern...

This note develops a behavioral explanation for the existence of an asymmetric tax treatment of gains and losses when investors are loss averse. We find that loss offset rules should be more restrictive for investors which are (1) more risk averse in case of gains, (2) less risk seeking in case...

This paper explores cultural differences in risky choices between Australian and German students. The purpose of this paper is to challenge the wide-spread view that investment in residential property in East Germany after unification has turned out to be a financial disaster in most cases by...

The use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One major assumption in this context is that subjects will rather use their private information strategically than to reveal them truthfully, if they do not get any...