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Income tax evasion in a society of heterogeneous agents: Evidence from an agent-based model

Sascha Hokamp and Michael Pickhardt

No 35, MEP Discussion Papers from University of Münster, Münster Center for Economic Policy (MEP)

Abstract: We analyze the evolution and extent of income tax evasion under alternative governmental policies in an agent-based model with heterogeneous agents. A novel aspect of our modeling is the use of an exponential utility function, which allows us to assume rather realistic audit probabilities and to yield more realistic results with respect to the extent of tax evasion. Further, the introduction of lapse of time effects constitutes another novel aspect of our model. Among other things, the model allows for assessing the impact of alternative policies on tax evasion. Subject to the model features, we find that ethical norms and lapse of time effects reduce the extent of tax evasion particularly strong.

Keywords: income tax evasion; heterogeneous population; lapse of time; ethical behavior; agent-based models (search for similar items in EconPapers)
JEL-codes: C9 H26 (search for similar items in EconPapers)
Date: 2010
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https://www.econstor.eu/bitstream/10419/51382/1/672456508.pdf (application/pdf)

Related works:
Journal Article: Income Tax Evasion in a Society of Heterogeneous Agents - Evidence from an Agent-based Model (2010) Downloads
Working Paper: Income Tax Evasion in a Society of Heterogeneous Agents – Evidence from an Agent-based Model Downloads
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