Heuristic model of taxpayer behaviour : application to Russian experience with regard to tax evasion

The article concerns with the subject of studying economic behavior of taxpayers with regard to tax evasion. An overview of theoretic and methodological approaches concerning decision making on the base of rational and behavior principles is given. The methodology of research assumes application of agent-based and heuristic approach. Neural networks are used as tooling for model construction referred to taxpayer decision-making in terms of the heuristic approach. Economic agent behaviour model in the context of shadow economy includes external socio-economic parameters (macroeconomic situation, quality of public services, tax burden, prevalence of tax evasion behaviour models) and internal factors influencing the nature of decision made. An application of prospect theory was presented as a mathematical instrument to describe functional dependencies between internal and external environmental factors and subjective efficiency of the alternatives. Application of prospect theory regarding shadow activity with an allowance for punishment risk was given in the article. Verification of the model by way of the evaluation technique for mutual information matching complexity was suggested by author. General pattern of the agent-based approach is given in the work. As principal criteria influencing generation of decision-making heuristics and determining agents' cooperation were revealed (opportunity to be jointly involved in shadow activity, coordination of alternatives and volume of shadow money, readiness to drastically resist shadow activity as a result of budget wastage and socio-economic backset, disposition of government bodies towards granting unreasonable privileges for business as a result of corrupt practice). The key features of agents were described considering particularities of decision making with reference to tax evasion: self-sufficiency, public conduct, reactivity, purposeful activity. Types of agent cooperation and consequences for external environment were described including following: origination of new agents, suppression of existing agents' activity, replacement of agents in the process of cooperation at different stages of the reproduction process, reinvigoration of agents. The approach given provides possibility to simulate changes in the shadow sector of economy based on evaluation of probable irrational response by economic agents to potential changes in the tax, financial and economic policies with regard to interaction between agents (companies, tax authorities, government and consumers).