Evolution of Tax Evasion
AbstractIn this paper we analyze a tax evasion game with taxpayer learning by imitation. If the authority commits to a fixed auditing probability, a positive share of cheating is obtained in equilibrium. This stands in contrast to the existing literature that yields full compliance of audited taxpayer who are rational, have a lot of information and thus do not need to interact. When the authority adjusts auditing probability every period, cycling in cheating-auditing occurs. Thus, the real life phenomenon of compliance fluctuations is explained within the model rather than by exogenous parameter shifts.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 966.
Date of creation: Jun 2003
Date of revision: 06 Dec 2005
tax evasion; imitation; learning;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
This paper has been announced in the following NEP Reports:
- NEP-ACC-2007-01-14 (Accounting & Auditing)
- NEP-ALL-2007-01-14 (All new papers)
- NEP-PBE-2007-01-14 (Public Economics)
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