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Economics of Governance

, Volume 16, Issue 2, pp 143–164 | Cite as

The use of agent-based modelling to investigate tax compliance

  • Nigar Hashimzade
  • Gareth D. Myles
  • Frank Page
  • Matthew D. Rablen
Original Paper

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.

Keywords

Agent-based modelling Tax evasion Attitudes Beliefs  Social network Occupational choice 

JEL Classification

H26 D85 C63 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Nigar Hashimzade
    • 1
    • 2
  • Gareth D. Myles
    • 1
    • 3
  • Frank Page
    • 4
  • Matthew D. Rablen
    • 1
    • 5
  1. 1.Institute for Fiscal StudiesLondonUK
  2. 2.Durham UniversityDurhamUK
  3. 3.Department of EconomicsUniversity of ExeterExeterUK
  4. 4.Indiana UniversityBloomingtonIndiana
  5. 5.Brunel University LondonUxbridgeUK

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