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Show Your Hand: The Impacts of
Fair Pricing Requirements in Procurement Contracting
Journal of Accounting Research (2024)
Received the 2023 Best Dissertation Award from the Naveen Jindal School of Management at The University of Texas at Dallas.
Committee: Ashiq Ali (Chair), Ningzhong Li, Suresh Radhakrishnan, Ricardo Perez-Truglia, Gil Sadka
Abstract: This paper studies a provision in federal procurement regulation, known as the Truth in Negotiations Act (TINA), which stipulates how contracting officials can ensure price reasonableness. Following TINA, for contracts above a certain size threshold, contracting officials cannot rely solely on their judgment and must either require that suppliers provide accounting data supporting their proposed prices or expect multiple competing bids. Using a regression discontinuity design, I find that compared to below-threshold contracts, above-threshold contracts experience greater competition (i.e., more bids), improved performance (i.e., less frequent re-negotiations and cost overruns), and reduced reliance on cost-plus type contracts. These findings are consistent with the procurement system enhancing competition and monitoring for above-threshold contracts.
Select Presentations:
U.S. Department of Defense - Acquisition Innovation Research Center (video)
Columbia Business School
McGill University
University of Maryland
Rutgers University
Baruch College
University of Hong Kong
National University of Singapore
Hawaii Accounting Conference
The University of Texas at Dallas
Hong Kong University of Science and Technology
2021 AAA Deloitte Doctoral Consortium
Snapshot from the study: The TINA threshold changed from $750,000 to $2,000,000 in 2018. Blue circles correspond to the period prior to the change, and red dots to the period after the threshold change. The rate at which the data is included exhibits a large jump at each threshold only while it was effective. This regulation is the main source of variation for the contracting outcomes examined in this study.
My Taxes Are Too Darn High,
Why Do Households Protest Their Taxes?
With Ricardo Perez-Truglia & Alejandro Zentner
American Economic Journal: Economic Policy
Abstract: In the United States and many other countries, taxpayers can file a protest to legally reduce their property taxes. While tax protests can provide a unique opportunity to study the (un)willingness to pay taxes, they have received little attention from researchers. To fill that gap, we study what motivates households to protest their property taxes. Using a field experiment and a quasi-experiment, we show that both expected savings and filing frictions play significant roles. We estimate the magnitude of filing frictions using a money metric. We also discuss how low-cost interventions targeted at disadvantaged groups can mitigate existing economic and racial disparities in the system of tax appeals.
Select Presentations:
University of Chicago Behavioral Seminar (Nathan)
2021 AAA Annual Meeting (Nathan)
American Enterprise Institute (Perez-Truglia)
Stanford GSB Political Economy Workshop (Perez-Truglia)
Louis-André Gérard-Varet, U. of Barcelona Workshop (Zentner)
2020 NBER Public Economics Program (Perez-Truglia)
Snapshot from the study: In many states, property taxes are based on the assessed value of the household. A household's property tax protest reduces the household's assessed value if successful. Households with "homestead" status have their taxable value limited to 10% growth per year (known as the "homestead cap" value). This implies that if a household is assessed at $X above the homestead cap, the first $X reduction in the assessed value provides zero dollars of tax savings. The figure shows that homestead households exhibit a sharp kink in protest rates at the homestead cap, since the reduction in assessed value must be larger the further the assessed value is above the cap for a household to save taxes from protesting.
Where Do My Tax Dollars Go? Tax Morale Effects of Government Spending
With Matías Giaccobasso, Ricardo Perez-Truglia, & Alejandro Zentner
Forthcoming at American Economic Journal: Applied Economics
Abstract: Do perceptions about how the government spends tax dollars affect the willingness to pay taxes? We designed a field experiment to test this hypothesis in a natural, high-stakes context and via revealed preferences. We measure perceptions about the share of property tax revenues that fund public schools and the share of property taxes that are redistributed to disadvantaged districts. We find that even though information on where tax dollars go is publicly available and easily accessible, taxpayers still have significant misperceptions. We use an information-provision experiment to induce exogenous shocks to these perceptions. Using administrative data on tax appeals, we measure the causal effect of perceived government spending on the willingness to pay taxes. We find that some perceptions about government spending have a significant effect on the probability of filing a tax appeal and in a manner that is consistent with the classical theory of benefit-based taxation. We discuss implications for researchers and policy makers.
Select Presentations:
Hawaii Accounting Research Conference (Nathan)
2023 American Economic Association (Zentner)
University of Michigan (Perez-Truglia)
University of Chicago UCEMA ESA (Perez-Truglia)
2022 NBER Public Economics Program (Perez-Truglia)
RIDGE Public Economics (Giaccobasso)
International Institute of Public Finance (IIPF) (Giaccobasso)
Is the Partisan Divide Real? Polarization in Preferences for Redistribution
With Ricardo Perez-Truglia & Alejandro Zentner
American Economic Review Papers & Proceedings (2022)
Abstract: Republicans and Democrats are believed to be worlds apart from each other in their preferences for the role of the government, provision of public goods, and redistribution (Ahler, 2014). However, is the partisan divide real? In this paper, we provide some evidence from a context where the revealed differences in preferences for taxation and public goods provision are actually small and show that our revealed-preference evidence is consistent with some survey questions.
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