Prospect theory in explaining tax payment

The preferences of individuals have always been a subject of interest to researchers from past to present. Especially in recent years, research on how people decide has led psychology and economics researchers to conduct interdisciplinary studies. Behavioural economics researchers aim to determine how individuals actually make choices with their laboratory experiments. Prospect Theory, developed together by Kahneman and Tversky, which made an important contribution to behavioural economics, brought a new perspective to rational decision making. Loss aversion is also one of the topics covered within the scope of prospect theory. The individual who compares the same amount of loss with the gain, attributing more value to this loss than the gain is called 'loss aversion'. Loss aversion is an important psychological concept that is receiving increasing attention in economic analysis. Experimental studies revealing that the psychology of taxpayers has an important place in their attitudes and behaviors towards taxes has given a new direction to this field. Thus, besides the economic and financial factors affecting tax compliance, the importance of non-economic factors has also increased. The aim of this study is to determine whether loss aversion and the risk level of individuals are effective in tax compliance. Logit and Tobit regression models were used in the analysis of 817 survey data obtained by the survey technique. The loss aversion ratio, which was calculated as 2,25 by Tversky & Kahneman, was calculated as 4,50. Findings on loss aversion; It shows that as the risk level of individuals increases, the rate of loss aversion decreases, and as the population of the region they live in increases, the rate of loss aversion increases. The findings on the tax compliance - loss aversion relationship indicate that individuals with high loss aversion rate want to pay 34,7% less tax than those with low loss aversion rate, that there is no significant relationship between the risk level of individuals and tax compliance, and that individuals with education in social sciences it shows that they want to pay 19% more tax than individuals who are educated in a field other than social sciences.