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Published & Forthcoming Papers
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 Truth in Negotiations Act threshold, which requires contracting officials to ensure reasonable prices for federal contracts expected to surpass the threshold, increased from $750,000 to $2,000,000 in 2018. Blue circles show contracts before the change, and red dots after. The rate that cost data is required jumps sharply at each threshold only while it is in force. Contrary to most practitioners' expectations, I also find each threshold drives greater competition. Reliance on cost-plus contracts declines as well.
Paying Your Fair Share:
Perceived Fairness and Tax Compliance
With Ricardo Perez-Truglia & Alejandro Zentner
Journal of Accounting & Economics (Forthcoming)
Abstract: We provide evidence on the role of perceived fairness in tax compliance. Are households more willing to pay taxes when they believe others are contributing their fair share? We investigate this question through a natural field experiment in the context of U.S. property taxes. Using an information-disclosure experiment, we exogenously shifted households' perceptions of the average tax rate paid by others. We find that higher perceived average tax rates increase perceptions of fairness and reduce the likelihood of filing a tax appeal. We quantify the effect of fairness in monetary terms: for every additional $1 paid by the average household, an individual taxpayer is willing to contribute an additional $0.43. In the field experiment, subjects were informed about the average tax rate but not why it might differ from their own. In a complementary survey, we show that this context matters: when households learn that others pay lower rates due to exemptions, such as for disability or advanced age, they are more willing to tolerate unequal tax rates.
Select Presentations:
University of Chicago Behavioral Seminar (Nathan)
2024 Rutgers Accounting Research Conference (Nathan)
Stanford GSB Political Economy Workshop (Perez-Truglia)
Federal Reserve Bank of Chicago (Zentner)
ZEW Public Finance Conference (Zentner)
Yale Public & Labor Workshop (Perez-Truglia)
Snapshots from the study:
Above: In a survey experiment, most households thought they paid the average property tax rate, even though that is rarely true. When given accurate information, they adjusted their beliefs accordingly.
Below: In the information-disclosure field experiment, we find that higher perceived average tax rates increase perceptions of fairness and reduce tax appeal rates.
Where Do My Tax Dollars Go?
Tax Morale Effects of Government Spending
With Matías Giaccobasso, Ricardo Perez-Truglia, & Alejandro Zentner
American Economic Journal: Applied Economics (2025)
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)
International Institute of Public Finance (IIPF) (Giaccobasso)
Snapshot from the study: When we informed homeowners what share of their property taxes funds local schools, appeals fell by about 4.8 percentage points among households with children, and rose by a similar amount among those without children. This gap provides natural, revealed-preference evidence of reciprocal motivation in tax compliance.
My Taxes Are Too Darn High,
Why Do Households Protest Their Taxes?
With Ricardo Perez-Truglia & Alejandro Zentner
American Economic Journal: Economic Policy (2025)
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 appraised value, which households can challenge through protests. For “homestead” households, taxable value cannot rise by more than 10% per year. Because taxes are based on this capped value, protests only reduce the tax bill if they push the appraisal below the cap. The figure shows a clear kink at the cap: households are less likely to protest the further their appraised value is above it. We combine this quasi-experimental variation with a field experiment to estimate the filing frictions of protesting.
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.
Media coverage:
Marginal Revolution: "How much are Republicans and Democrats polarized really?"
Working Papers
Do Shareholders Benefit From Fee-Shifting Bylaws?
With Ashiq Ali
Abstract: In the event of a shareholder lawsuit, fee-shifting bylaws can shift the firm’s legal fees from itself to the suing party if the suing party does not obtain a judgment on the merits that substantially achieves the full remedy sought. These bylaws may help deter non-meritorious lawsuits, but may also undermine shareholders’ use of litigation as a corporate disciplining mechanism. Thus, the net effect of legalizing these bylaws on shareholder wealth is an empirical question. To address this question, we conduct an event study that examines the effects on stock prices of Delaware firms of a Delaware court ruling that legalized such fee-shifting bylaws and of subsequent Delaware legislative events, which resulted in a ban on such bylaws. Our findings suggest that on average Delaware firms’ stocks reacted negatively to the legalization of the bylaws. We further show that stocks of Delaware firms with higher exposure to non-meritorious litigation risk reacted more favorably than the stocks of other Delaware firms to legalizing such fee-shifting bylaws. Our results suggest that on average shareholder wealth decreased when fee-shifting bylaws were legalized. However, there is significant heterogeneity in the effect on shareholders’ wealth depending on firms’ exposure to non-meritorious litigation risk.
Select Presentations:
UC Berkeley Law & Economics Workshop (Nathan)
University of Pennsylvania Law Workshop, Brown Bag (Nathan)
Northwestern University Causal Inference Workshop (Nathan)
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