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Anti-evasion auditing policy in the presence of common income shocks

Sanchez-Villalba, Miguel (2006) Anti-evasion auditing policy in the presence of common income shocks. DARP (80). Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.

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Abstract

When fairly homogeneous taxpayers are affected by common income shocks, a tax agency’s optimal auditing strategy consists of auditing a low-income declarer with a probability that (weakly) increases with the other taxpayers’ declarations. Such policy generates a coordination game among taxpayers, who then face both strategic uncertainty - about the equilibrium that will be selected.and fundamental uncertainty - about the type of agency they face. Thus the situation can be realistically modelled as a global game that yields a unique and usually interior equilibrium which is consistent with empirical evidence. Results are also applicable to other areas like regulation or welfare benefit allocation.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk
Additional Information: © 2006 Miguel Sanchez-Villalba
Divisions: STICERD
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations; Speculations
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion
Sets: Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Date Deposited: 07 Jul 2008 07:27
Last Modified: 14 Jan 2020 00:27
URI: http://eprints.lse.ac.uk/id/eprint/6543

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