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How Much Rationality Tolerates the Shadow Economy? – An Agent-Based Econophysics Approach

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Advances in Social Simulation

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 229))

Abstract

We calculate the size of the shadow economy within a multi-agent econophysics model previously developed for the study of tax evasion. In particular, we analyze deviating behavior depending on the fraction of rational agents which aim to pursue their self interest. Two audit mechanisms are considered within our model, that are, (i) a constant compliance period which is enforced after black market activities of an agent have been detected and (ii) a backauditing method which determines the compliance period according to the particpation rate in the shadow economy within a previously preassigned time interval. We calibrate our simulation with respect to experimental evidence of tax compliance in France and Germany and give estimates for the percentage of selfish agents in these countries. This implies different policy recommendations that may work to fight the shadow economy, tax evasion, and the like.

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Authors and Affiliations

  1. Institute of Economics, BTU Cottbus, P.O. Box 101344, 03013, Cottbus, Germany

    Sascha Hokamp

  2. Institute of Physics, BTU Cottbus, P.O. Box 101344, 03013, Cottbus, Germany

    Götz Seibold

Authors
  1. Sascha Hokamp
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  2. Götz Seibold
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Corresponding author

Correspondence to Sascha Hokamp .

Editor information

Editors and Affiliations

  1. Division of Decision Analysis and Support, School of Economics Institute of Econometrics, Warsaw, Poland

    Bogumił Kamiński

  2. Division of Decision Analysis and Support, School of Economics, Institute of Econometrics, Warsaw, Poland

    Grzegorz Koloch

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Hokamp, S., Seibold, G. (2014). How Much Rationality Tolerates the Shadow Economy? – An Agent-Based Econophysics Approach. In: Kamiński, B., Koloch, G. (eds) Advances in Social Simulation. Advances in Intelligent Systems and Computing, vol 229. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-39829-2_11

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  • DOI: https://doi.org/10.1007/978-3-642-39829-2_11

  • Publisher Name: Springer, Berlin, Heidelberg

  • Print ISBN: 978-3-642-39828-5

  • Online ISBN: 978-3-642-39829-2

  • eBook Packages: EngineeringEngineering (R0)

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