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

Author

Listed:
  • Hokamp, Sascha
  • Pickhardt, Michael
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.

Suggested Citation

  • Hokamp, Sascha & Pickhardt, Michael, 2010. "Income tax evasion in a society of heterogeneous agents: Evidence from an agent-based model," CAWM Discussion Papers 35, University of Münster, Münster Center for Economic Policy (MEP).
    • Handle: RePEc:zbw:cawmdp:35
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    income tax evasion; heterogeneous population; lapse of time; ethical behavior; agent-based models;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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