Decentralized Deterrence, with an Application to Labor Tax Auditing

Edoardo Di Porto, Nicola Persico and Nicolas Sahuguet

American Economic Journal: Microeconomics, 2013, vol. 5, issue 1, 35-62

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)

JEL-codes: H25 H26 M42 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mic.5.1.35
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Citations: View citations in EconPapers (13)

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Working Paper: Decentralized Deterrence, with an Application to Labor Tax Auditing (2012)
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