Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-compliance in a Model of Tax Enforcement

Maciej Kotowski, David A. Weisbach and Richard Zeckhauser
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David A. Weisbach: University of Chicago

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income.

JEL-codes: C71 D82 D86 (search for similar items in EconPapers)
Date: 2014-01
New Economics Papers: this item is included in nep-acc, nep-cta, nep-iue, nep-law, nep-mic and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:rwp14-001

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