Misreporting, retroactive audit and redistribution
AbstractIn this paper, we investigate an audit policy that allows a regulator to control past declarations of an agent who is caught to fraud in the current period or to adopt an action that is not desirable for Society. Coupled with redistribution effects due to the production of a public good, we show that retroactivity has not always the desired effect on the level of evasion or the level of effort, once the agent has decided to deviate from a given objective. Nevertheless, we derive conditions under which retroactivity lessens fraudulent behaviors, in quantity and in value. As a related result, authorities should communicate about how they use the individual contributions but information should not be completely transparent in order to fight efficiently against deviation. Redistribution and retroactivity may have opposite effects on the behavior of the agent when combined together.
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Bibliographic InfoPaper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2006-30.
Date of creation: 2006
Date of revision:
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moral hazard; retroactive audit; redistribution; public good; fraud.;
Other versions of this item:
- Sandrine Spaeter & Marc Willinger, 2006. "Misreporting, Retroactive Audit and Redistribution," Working Papers 06-12, LAMETA, Universtiy of Montpellier, revised Nov 2006.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
This paper has been announced in the following NEP Reports:
- NEP-ACC-2006-11-04 (Accounting & Auditing)
- NEP-ALL-2006-11-04 (All new papers)
- NEP-PBE-2006-11-04 (Public Economics)
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