Optimal Audit Policy and Heterogenous Agents
AbstractFrauds can be explained not only in terms of individual willingness to cheat, but may also be driven by opportunities to behave dishonestly. The audit policy should therefore be different for different categories of agents. This paper focuses on the optimal audit policy when there are two categories of agents and shows that the auditor adopts different policies depending on its budget. When resources are quite limited, the auditor sets identical audit probabilities for both types. On the other hand, in most of the cases, the authority should first ensure that people with lower opportunities choose not to commit an offence.
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Bibliographic InfoPaper provided by EconWPA in its series Public Economics with number 0301001.
Length: 35 pages
Date of creation: 22 Jan 2003
Date of revision:
Note: Type of Document - PDF; prepared on PC-ScientificWord; pages: 35 ; figures: included/
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Fraud; audit; opportunities; budget allocation.;
Other versions of this item:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-01-27 (All new papers)
- NEP-CFN-2003-01-27 (Corporate Finance)
- NEP-LAW-2003-01-27 (Law & Economics)
- NEP-PUB-2003-01-27 (Public Finance)
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