IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v5y2013i1p35-62.html

Decentralized Deterrence, with an Application to Labor Tax Auditing

Author

Listed:
  • Edoardo Di Porto
  • Nicola Persico
  • Nicolas Sahuguet

Abstract

This paper studies a new strategic auditing game in which atomistic auditors maximize the success rate of audits, and provides a method to calibrate its parameters based on audit data. Calibrating the model to Italian auditing data, we provide an estimate of tax evasion based on (non-random) audit data alone. Counterfactual simulation of the model quantifies the costs and benefits of alternative auditing policies. We compare decentralized enforcement with a counterfactual "commitment policy," and compute the loss from the former. (JEL H25, H26, M42)

Suggested Citation

  • Edoardo Di Porto & Nicola Persico & Nicolas Sahuguet, 2013. "Decentralized Deterrence, with an Application to Labor Tax Auditing," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 35-62, February.
    • Handle: RePEc:aea:aejmic:v:5:y:2013:i:1:p:35-62
    Note: DOI: 10.1257/mic.5.1.35
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.1.35
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/mic/app/2012-0034_app.pdf
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Edoardo Di Porto & Leandro Elia & Cristina Tealdi, 2013. "The "emersion" effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy," Working Papers 2/2013, IMT School for Advanced Studies Lucca, revised Jun 2013.
    2. Ichihashi, Shota, 2025. "Information and policing," Journal of Economic Theory, Elsevier, vol. 225(C).
    3. Levine, David K. & Modica, Salvatore, 2016. "Peer discipline and incentives within groups," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 19-30.
    4. Calel, Raphael & Dechezlepretre, Antoine & Venmans, Frank, 2023. "Policing carbon markets," LSE Research Online Documents on Economics 120565, London School of Economics and Political Science, LSE Library.
    5. Montalvo, José G. & Piolatto, Amedeo & Raya, Josep, 2020. "Transaction-tax evasion in the housing market," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    6. Calel, Raphael & Dechezlepretre, Antoine & Venmans, Frank, 2023. "Policing carbon markets," LSE Research Online Documents on Economics 128531, London School of Economics and Political Science, LSE Library.
    7. Levine, David K. & Modica, Salvatore, 2017. "Size, fungibility, and the strength of lobbying organizations," European Journal of Political Economy, Elsevier, vol. 49(C), pages 71-83.
    8. David K Levine & Salvatore Modica, 2013. "Peer Discipline and the Strength of Organizations," Levine's Bibliography 786969000000000713, UCLA Department of Economics.
    9. Appelgren, Leif, 2020. "A survey of models for determining optimal audit strategies," Advances in accounting, Elsevier, vol. 48(C).
    10. Edoardo Di Porto & Leandro Elia & Cristina Tealdi, 2017. "Informal work in a flexible labour market," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 143-164.

    More about this item

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Decentralized Deterrence, with an Application to Labor Tax Auditing (AEJ:MI 2013) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:5:y:2013:i:1:p:35-62. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.