Evolution of Tax Evasion

Vilen Lipatov

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we analyze a tax evasion game with taxpayer learning by imitation. If the authority commits to a fixed auditing probability, a positive share of cheating is obtained in equilibrium. This stands in contrast to the existing literature that yields full compliance of audited taxpayer who are rational, have a lot of information and thus do not need to interact. When the authority adjusts auditing probability every period, cycling in cheating-auditing occurs. Thus, the real life phenomenon of compliance fluctuations is explained within the model rather than by exogenous parameter shifts.

Keywords: tax evasion; imitation; learning (search for similar items in EconPapers)
JEL-codes: C73 H26 (search for similar items in EconPapers)
Date: 2003-06, Revised 2005-12-06
New Economics Papers: this item is included in nep-acc and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:966

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