Dynamics of tax evasion with back auditing, social norm updating, and public goods provision – An agent-based simulation

Sascha Hokamp

Journal of Economic Psychology, 2014, vol. 40, issue C, 187-199

Abstract: Income tax evasion dynamics and social interactions are analyzed with an agent-based model in heterogeneous populations. One novelty is the combined analysis of back auditing and ageing, which allows for incorporating psychological findings with respect to social norm updating over a taxpayer’s life cycle. Another novelty concerns individual’s social behavior regarding a Pareto-optimal provision of public goods. Simulation results support the counterintuitive conclusion drawn elsewhere in the literature that income tax compliance may decrease with raising marginal per capita returns (MPCRs). Yet, back auditing seems to have by far the strongest impact on the dynamics of fiscal fraud and also can help to curb the extent of tax evasion (ETE).

Keywords: Income tax evasion; Back auditing; Public goods provision; Pareto-optimality; Heterogeneous population; Social norms; Agent-based modeling (search for similar items in EconPapers)
JEL-codes: C90 H26 H41 O17 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:40:y:2014:i:c:p:187-199

DOI: 10.1016/j.joep.2013.01.006

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