In his doctoral dissertation at Hanken School of Economics, Tuomas Nurminen uses laboratory experiments to study economic settings in which trust, trustworthiness, and the misreporting of private information are key elements.

“The studies presented in the dissertation demonstrate that social and psychological factors, such as aversion to lying and concern for how one appears to others, can help explain important economic phenomena,” Nurminen explains.

In his research Nurminen explores, for example, markets for expert services, such as healthcare services. In these markets, expert sellers are better informed than their customers about the appropriate service. This creates incentives for experts to defraud customers, for example by providing unnecessarily expensive services.

“When customers have to rely on expert advice, trust becomes important. My results suggest that experts are more likely to take advantage of customers who appear trusting,” Nurminen explains.

Nurminen also studied sales tax reporting in competitive laboratory markets. He shows that tax evasion by sellers is common which reduces tax revenue. Despite this, prices remain higher and trading activity lower than expected.

This implies that tax distortions are, in fact, significant and that most of the tax burden falls on buyers. One possible explanation is that sellers care about appearing honest and therefore avoid low prices since they may be seen as evidence of tax evasion.”