This work studies the dynamics of compliance and optimal auditing in a population of boundedly rational agents who decide whether to engage in tax evasion depending on an evolutionary adaptation process. If they decide to evade taxes, taxpayers can choose different ways to engage in tax evasion and face different auditing probabilities. Moreover, taxpayers make decisions according to the (realistic) principles of Prospect Theory. The analysis studies the intertemporal optimal auditing of a tax authority that targets tax revenues maximization and strategically selects audit probabilities to manage the trade-off created by controlling different modes of evasion with a resource constraint.

Evolutionary tax evasion, prospect theory and heterogeneous taxpayers

De Giovanni D.;Lamantia F.
;
2020

Abstract

This work studies the dynamics of compliance and optimal auditing in a population of boundedly rational agents who decide whether to engage in tax evasion depending on an evolutionary adaptation process. If they decide to evade taxes, taxpayers can choose different ways to engage in tax evasion and face different auditing probabilities. Moreover, taxpayers make decisions according to the (realistic) principles of Prospect Theory. The analysis studies the intertemporal optimal auditing of a tax authority that targets tax revenues maximization and strategically selects audit probabilities to manage the trade-off created by controlling different modes of evasion with a resource constraint.
978-981-15-3622-9
978-981-15-3623-6
Auditing
Controlled evolutionary dynamics
Optimal control
Prospect theory
Tax evasion
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.11770/334821
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