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Abstract

In this paper we try to understand the phenomenon whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders, and the number caught in previous periods. General conditions exist under which any expected utility maximizing potential tax evaders will decide to emulate other tax evaders. Copyright � 2010 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9361.2010.00559.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 14 (2010)
Issue (Month): 2 (05)
Pages: 374-385

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Handle: RePEc:bla:rdevec:v:14:y:2010:i:2:p:374-385

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669

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Find related papers by JEL classification:

• H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
• H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
• D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

References

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