---
_id: '29049'
abstract:
- lang: eng
  text: "This study investigates the conditions under which tax rate changes accelerate
    risky investments.\r\nWhile tax rate increases are often expected to harm investment,
    analytical\r\nstudies find tax rate increases may foster investment under flexibility.We
    design a theorybased\r\nexperimentwith a binomial random walk and entry–exit flexibility.We
    find accelerated\r\ninvestment upon tax rate increases irrespective of an exit
    option, but no corresponding\r\nresponse to tax cuts. This asymmetry may be due
    to tax salience and mechanisms\r\nfrom irreversible choice under uncertainty.
    Given this evidence of unexpected tax-reform\r\neffects, tax policymakers should
    carefully consider behavioral aspects."
article_type: original
author:
- first_name: René
  full_name: Fahr, René
  last_name: Fahr
- first_name: Elmar A.
  full_name: Janssen, Elmar A.
  last_name: Janssen
- first_name: Caren
  full_name: Sureth-Sloane, Caren
  id: '530'
  last_name: Sureth-Sloane
  orcid: ' 0000-0002-8183-5901'
citation:
  ama: Fahr R, Janssen EA, Sureth-Sloane C. Can Tax Rate Changes Accelerate Investment
    under Entry and Exit Flexibility? – Insights from an Economic Experiment. <i>FinanzArchiv
    / European Journal of Public Finance</i>. 2022;78(1-2):239-289.
  apa: Fahr, R., Janssen, E. A., &#38; Sureth-Sloane, C. (2022). Can Tax Rate Changes
    Accelerate Investment under Entry and Exit Flexibility? – Insights from an Economic
    Experiment. <i>FinanzArchiv / European Journal of Public Finance</i>, <i>78</i>(1–2),
    239–289.
  bibtex: '@article{Fahr_Janssen_Sureth-Sloane_2022, title={Can Tax Rate Changes Accelerate
    Investment under Entry and Exit Flexibility? – Insights from an Economic Experiment},
    volume={78}, number={1–2}, journal={FinanzArchiv / European Journal of Public
    Finance}, author={Fahr, René and Janssen, Elmar A. and Sureth-Sloane, Caren},
    year={2022}, pages={239–289} }'
  chicago: 'Fahr, René, Elmar A. Janssen, and Caren Sureth-Sloane. “Can Tax Rate Changes
    Accelerate Investment under Entry and Exit Flexibility? – Insights from an Economic
    Experiment.” <i>FinanzArchiv / European Journal of Public Finance</i> 78, no.
    1–2 (2022): 239–89.'
  ieee: R. Fahr, E. A. Janssen, and C. Sureth-Sloane, “Can Tax Rate Changes Accelerate
    Investment under Entry and Exit Flexibility? – Insights from an Economic Experiment,”
    <i>FinanzArchiv / European Journal of Public Finance</i>, vol. 78, no. 1–2, pp.
    239–289, 2022.
  mla: Fahr, René, et al. “Can Tax Rate Changes Accelerate Investment under Entry
    and Exit Flexibility? – Insights from an Economic Experiment.” <i>FinanzArchiv
    / European Journal of Public Finance</i>, vol. 78, no. 1–2, 2022, pp. 239–89.
  short: R. Fahr, E.A. Janssen, C. Sureth-Sloane, FinanzArchiv / European Journal
    of Public Finance 78 (2022) 239–289.
date_created: 2021-12-20T08:23:13Z
date_updated: 2026-04-09T07:25:41Z
department:
- _id: '187'
intvolume: '        78'
issue: 1-2
jel:
- H25
- H21
- C91
keyword:
- Economic ExperimentM
- Investment Decisions
- Tax Effects
- Timing Flexibility
- Uncertainty
language:
- iso: eng
page: 239-289
publication: FinanzArchiv / European Journal of Public Finance
publication_status: published
quality_controlled: '1'
status: public
title: Can Tax Rate Changes Accelerate Investment under Entry and Exit Flexibility?
  – Insights from an Economic Experiment
type: journal_article
user_id: '96670'
volume: 78
year: '2022'
...