An agent-based model of network effects on tax compliance and evasion

Andrei, Amanda; Comer, Kevin T.; Koehler, Matthew T. K.

doi:10.1016/j.joep.2013.01.002

Cited by 53 publications

(36 citation statements)

References 32 publications

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“…It involves the construction of a set of agents and an environment in which they interact, and has proved useful in many di¤erent areas of natural science and social science. There have been numerous economic applications (surveyed in Tesfatsion 2006) and several previous studies of tax compliance (Andrei et al 2014;Bloomquist 2004Bloomquist , 2012Davis et al 2003;Hashimzade et al 2014;Korobow et al 2007). Before describing what our work contributes to this literature, we provide in this section a general introduction to agent-based modelling.…”

Section: Agent-based Modellingmentioning

confidence: 99%

The use of agent-based modelling to investigate tax compliance

et al. 2014

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Agent-based modelling can be used to investigate the behavioural and social aspects of tax compliance. We illustrate the approach with two models. The …rst model emphasises the role of occupational choice in tax compliance, and explores the e¤ect 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 …xed number of taxpayers from each occupation dominates alternative strategies (including random and focussed strategies) in the sense of …rst-order stochastic dominance.

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Section: Agent-based Modellingmentioning

confidence: 99%

The use of agent-based modelling to investigate tax compliance

et al. 2014

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“…• Using central figures within social networks is a good way to help disseminate information on positive social norms and challenge perceived social norms (Andrei et al 2013).…”

Section: Key Findingsmentioning

confidence: 99%

Using behavioural insights for citizen compliance and cooperation

John¹,

Robb²

2017

Evidence Base

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In recent years, public agencies have frequently deployed behavioural insights to generate benefits for society, through encouraging citizens to comply with official requests, and more generally encouraging them to cooperate with public agencies to help deliver outcomes of collective benefit. In parallel, there has been a large increase in the amount and quality of the research evidence available on behavioural public policy. This review takes two contrasting areas where behavioural insights have been used: tax collection where government policy is compulsory (i.e. requiring compliance), and energy use where social objectives are non-compulsory, and achieved more by persuasion and encouragement. Processes of modifying and changing behaviour require different approaches whether the change is deemed necessary by the state or not. In taxes, the sole use of enforcement is rarely efficacious, whereas increasing the uncertainty of follow-up and audit increases compliance. Offering discounts for energy bills appears to be an effective method for achieving cooperation. However, the use of social norms and increased information and professional advice is effective for both compulsory and non-compulsory areas of compliance and cooperation. This has important implications for policymakers, who may be seeking effective methods of encouraging behaviour change. While there are differences in approaches for compulsory and non-compulsory areas of policy, there may be areas that move from non-statutory to statutory in the future. In this case, the development of desired social norms appears to be the most effective method of ensuring overall compliance.

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“…For a given enforcement regime, an environment with limited knowledge of neighbor payoffs appears to lead to higher levels of aggregate compliance than when agents are aware of neighbor strategy payoffs (Korobow et al 2007). In addition, the effects of network topologies in the propagation of evasive behavior is found important for tax compliance (Andrei et al 2013). Legal modeling approach of financial fraud was set up using Wigmore charts, a graphical method for legal evidence, and ontologies (Kingston et al 2004).…”

Section: Tax Evasion Modelingmentioning

confidence: 99%

Detecting tax evasion: a co-evolutionary approach

et al. 2016

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We present an algorithm that can anticipate tax evasion by modeling the co-evolution of tax schemes with auditing policies. Malicious tax non-compliance, or evasion, accounts for billions of lost revenue each year. Unfortunately when tax administrators change the tax laws or auditing procedures to eliminate known fraudulent schemes another potentially more profitable scheme takes it place. Modeling both the tax schemes and auditing policies within a single framework can therefore provide major advantages. In particular we can explore the likely forms of tax schemes in response to changes in audit policies. This can serve as an early warning system to help focus enforcement efforts. In addition, the audit policies can be fine tuned to help improve tax scheme detection. We demonstrate our approach using the iBOB tax scheme and show it can capture the co-evolution between tax evasion and audit policy. Our experiments shows the expected oscillatory behavior of a biological co-evolving system.

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An agent-based model of network effects on tax compliance and evasion

Cited by 53 publications

References 32 publications

The use of agent-based modelling to investigate tax compliance

The use of agent-based modelling to investigate tax compliance

Using behavioural insights for citizen compliance and cooperation

Detecting tax evasion: a co-evolutionary approach

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