Rick C. Hatfield
The University of Texas at San Antonio
Scott B. Jackson
University of South Carolina
Abstract: Prospect Theory describes differences in risky decisions depending on the perspective (gain or loss) of the decision maker. In the current study, we hope to gain insight into this phenomenon by examining how the decision maker perceives these different perspectives. In a tax setting, we find that taxpayers who are due a tax refund (owe additional taxes) prior to considering a judgmentally determined tax deduction tend to perceive the conservative (aggressive) tax deduction to be more of an opportunity/ less of a threat. In turn, we find that taxpayer perceptions mediate the relationship between taxpayer perspectives and taxpayer behavior, meaning that taxpayer perspectives have a direct effect on taxpayer behavior and an indirect effect on behavior through their effect on taxpayer perceptions. These results suggest that future research can advance our understanding of the internal cognitive processes that shape taxpayer behavior by incorporating taxpayer perceptions into their research designs.
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