The use of agent-based modelling to investigate tax compliance
Authored by Nigar Hashimzade, Frank Page, Gareth D Myles, Matthew D Rablen
Date Published: 2015
DOI: 10.1007/s10101-014-0151-8
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Abstract
Agent-based modelling can be used to investigate the behavioural and
social aspects of tax compliance. We illustrate the approach with two
models. The first model emphasises the role of occupational choice in
tax compliance, and explores the effect of non-compliance on risk-taking
and income distribution. The modelling of the compliance decision is
discussed with an emphasis on decision-making under uncertainty and
social interaction. We then add to the model a social network which
governs the transmission of information on attitudes and beliefs, and
investigate alternative audit strategies. A strategy of auditing a fixed
number of taxpayers from each occupation dominates alternative
strategies (including random and focussed strategies) in the sense of
first-order stochastic dominance.
Tags
Social networks
Economics
Risk
utility
Prospect-theory
Occupational choice
Evasion