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Agent-based Modeling of Tax Evasion

Book Description

The only single-source guide to understanding, using, adapting, and designing state-of-the-art agent-based modelling of tax evasion

A computational method for simulating the behavior of individuals or groups and their effects on an entire system, agent-based modeling has proven itself to be a powerful new tool for detecting tax fraud. While interdisciplinary groups and individuals working in the tax domain have published numerous articles in diverse peer-reviewed journals and have presented their findings at international conferences, until Agent-based Modelling of Tax Evasion there was no authoritative, single-source guide to state-of-the-art agent-based tax evasion modeling techniques and technologies.

Featuring contributions from distinguished experts in the field from around the globe, Agent-Based Modelling of Tax Evasion provides in-depth coverage of an array of field tested agent-based tax evasion models. Models are presented in a unified format so as to enable readers to systematically work their way through the various modeling alternatives available to them. Three main components of each agent-based model are explored in accordance with the Overview, Design Concepts, and Details (ODD) protocol, each section of which contains several sub elements that help to illustrate the model clearly and that assist readers in replicating the modeling results described.

  • Presents models in a unified and structured manner to provide a point of reference for readers interested in agent-based modelling of tax evasion
  • Explores the theoretical aspects and diversity of agent-based modeling through the example of tax evasion
  • Provides an overview of the characteristics of more than thirty agent-based tax evasion frameworks
  • Functions as a solid foundation for lectures and seminars on agent-based modelling of tax evasion

The only comprehensive treatment of agent-based tax evasion models and their applications, this book is an indispensable working resource for practitioners and tax evasion modelers both in the agent-based computational domain and using other methodologies. It is also an excellent pedagogical resource for teaching tax evasion modeling and/or agent-based modeling generally. 

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
    1. Dedication
  4. Notes on Contributors
  5. Foreword
  6. Preface
  7. Part I: Introduction
    1. Chapter 1: Agent-Based Modeling and Tax Evasion: Theory and Application
      1. 1.1 Introduction
      2. 1.2 Tax Evasion, Tax Avoidance and Tax Noncompliance
      3. 1.3 Standard Theories of Tax Evasion
      4. 1.4 Agent-Based Models
      5. 1.5 Standard Protocols to Describe Agent-Based Models
      6. 1.6 Literature Review of Agent-Based Tax Evasion Models
      7. 1.7 Outlook: The Structure and Presentation of the Book
      8. References
    2. Chapter 2: How Should One Study Clandestine Activities: Crimes, Tax Fraud, and Other “Dark” Economic Behavior?
      1. 2.1 Introduction
      2. 2.2 Why Study Clandestine Behavior At All?
      3. 2.3 Tools for Studying Clandestine Activities
      4. 2.4 Networks and the Complexity of Clandestine Interactions
      5. 2.5 Layers of Analysis
      6. 2.6 Research Tools and Clandestine Activities
      7. 2.7 Conclusion
      8. Acknowledgment
      9. References
    3. Chapter 3: Taxpayer's Behavior: From the Laboratory to Agent-Based Simulations
      1. 3.1 Tax Compliance: Theory and Evidence
      2. 3.2 Research on Tax Compliance: A Methodological Analysis
      3. 3.3 From Human-Subject to Computational-Agent Experiments
      4. 3.4 An Agent-Based Approach to Taxpayers' Behavior
      5. 3.5 Conclusions
      6. References
  8. Part II: Agent-Based Tax Evasion Models
    1. Chapter 4: Using Agent-Based Modeling to Analyze Tax Compliance and Auditing
      1. 4.1 Introduction
      2. 4.2 Agent-Based Model for Tax Compliance and Audit Research
      3. 4.3 Modeling Individual Compliance
      4. 4.4 Risk-Taking and Income Distribution
      5. 4.5 Attitudes, Beliefs, and Network Effects
      6. 4.6 Equilibrium with Random and Targeted Audits
      7. 4.7 Conclusions
      8. Acknowledgments
      9. References
      10. Appendix 4A
    2. Chapter 5: SIMULFIS: A Simulation Tool to Explore Tax Compliance Behavior
      1. 5.1 Introduction
      2. 5.2 Model Description
      3. 5.3 Some Experimental Results and Conclusions
      4. Acknowledgments
      5. References
    3. Chapter 6: TAXSIM: A Generative Model to Study the Emerging Levels of Tax Compliance
      1. 6.1 Introduction
      2. 6.2 Model Description
      3. 6.3 Results
      4. 6.4 Conclusions
      5. Acknowledgments
      6. References
    4. Chapter 7: Development and Calibration of a Large-Scale Agent-Based Model of Individual Tax Reporting Compliance
      1. 7.1 Introduction
      2. 7.2 Model Validation and Calibration
      3. 7.3 Hypothetical Simulation: Size of the “Gig” Economy and Taxpayer Compliance
      4. 7.4 Conclusion and Future Research
      5. Acknowledgments
      6. References
      7. 7A.1 Purpose
      8. 7A.2 Entities, State Variables, and Scales
      9. 7A.3 Process Overview and Scheduling
      10. 7A.4 Design Concepts
      11. 7A.5 Initialization
      12. 7A.6 Input Data
      13. 7A.7 Submodels
    5. Chapter 8: Investigating the Effects of Network Structures in Massive Agent-Based Models of Tax Evasion
      1. 8.1 Introduction
      2. 8.2 Networks and Scale
      3. 8.3 The Model
      4. 8.4 The Experiment
      5. 8.5 Results
      6. 8.6 Conclusion
      7. References
    6. Chapter 9: Agent-Based Simulations of Tax Evasion: Dynamics by Lapse of Time, Social Norms, Age Heterogeneity, Subjective Audit Probability, Public Goods Provision, and Pareto-Optimality
      1. 9.1 Introduction
      2. 9.2 The Agent-Based Tax Evasion Model
      3. 9.3 Scenarios, Simulation Results, and Discussion
      4. 9.4 Conclusions and Outlook
      5. Acknowledgments
      6. References
      7. Appendix 9A
    7. Chapter 10: Modeling the Co-evolution of Tax Shelters and Audit Priorities*
      1. 10.1 Introduction
      2. 10.2 Overview
      3. 10.3 Design Concepts
      4. 10.4 Details
      5. 10.5 Experiments
      6. 10.6 Discussion
      7. References
    8. Chapter 11: From Spins to Agents: An Econophysics Approach to Tax Evasion
      1. 11.1 Introduction
      2. 11.2 The Ising Model
      3. 11.3 Application to Tax Evasion
      4. 11.4 Heterogeneous Agents
      5. 11.5 Relation to Binary Choice Model
      6. 11.6 Summary and Outlook
      7. References
    9. Index
  9. End User License Agreement