This paper studies a new strategic auditing game in which atomistic
auditors maximize the success rate of audits, and provides a method
to calibrate its parameters based on audit data. Calibrating the
model to Italian auditing data, we provide an estimate of tax evasion
based on (non-random) audit data alone. Counterfactual simulation
of the model quantifies the costs and benefits of alternative auditing
policies. We compare decentralized enforcement with a counterfactual
"commitment policy," and compute the loss from the former.
(JEL H25, H26, M42)
"Decentralized Deterrence, with an Application to Labor Tax Auditing."
American Economic Journal: Microeconomics,
Business Taxes and Subsidies including sales and value-added (VAT)