Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-compliance in a Model of Tax Enforcement

The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income.

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Year of publication:	2014-01
Authors:	Kotowski, Maciej H. ; Weisbach, David A. ; Zeckhauser, Richard J.
Institutions:	Kennedy School of Government, Harvard University

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Series:	Working Paper Series.
Type of publication:	Book / Working Paper
Classification:	C71 - Cooperative Games ; D82 - Asymmetric and Private Information ; D86 - Economics of Contract: Theory
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010942799