Abstract The influence of prepayment position (payment due or a refund available) on tax- payers' preferences for risky filing options was investigated in an experimental study. The within-subjects experimental design was based on prospect theory. Experienced taxpayers completed three tax eases with differing prepayment positions and two non-tax cases. The taxpayers' choices evidenced preference reversals that violate axioms of expected utility theory. The taxpayers selected significantly riskier filing positions and reported less income in the payment-due case than in the refund case.
Richard Dusenbury (Tue,) studied this question.