Social networks and occupational choice: The endogenous formation of attitudes and beliefs about tax compliance

The use of agent-based modelling to investigate tax compliance

“…It involves the construction of a set of agents and an environment in which they interact, and has proved useful in many di¤erent areas of natural science and social science. There have been numerous economic applications (surveyed in Tesfatsion 2006) and several previous studies of tax compliance (Andrei et al 2014;Bloomquist 2004Bloomquist , 2012Davis et al 2003;Hashimzade et al 2014;Korobow et al 2007). Before describing what our work contributes to this literature, we provide in this section a general introduction to agent-based modelling.…”

Tax Behaviour: Assessment of Tax Compliance in European Union Countries

“…Social interactions and social norms also play a key role in compliance decisions: taxpayers may be willing to evade as a mean to fight against unfair government or if they believe that other individuals are evading too. Both attitudes and beliefs arise endogenously from the horizontal and vertical interactions within a society (Hashimzade, Myles, Page, & Rablen, 2014). Taxpayers tend to exhibit (evasive) compliant behaviour as a response to (dis)advantageous inequity (Bazart & Bonein, 2014).…”

“…Taxpayers tend to exhibit (evasive) compliant behaviour as a response to (dis)advantageous inequity (Bazart & Bonein, 2014). However, they may also overestimate the other individuals' propensity towards evasion and therefore seek to adjust (lower) their compliance level as to fit the (Hashimzade, Myles, Page, & Rablen, 2014). Taxpayers tend to exhibit (evasive) compliant behaviour as a response to (dis)advantageous inequity (Bazart & Bonein, 2014).…”

“…In a study on endogenous social norms (Wenzel, 2005). In a study on endogenous formation of attitudes and beliefs (specific to a certain group), Hashimzade, Myles, Page, & Rablen (2014) conclude that formation is mutually reinforced through attitude towards evasion, risk aversion, choice of occupation and compliance; simulations demonstrate that social interactions lead to formation of subjective beliefs on audit probability (which tends to exceed the objective probability); individuals exhibit a self-selective behaviour concerning a social division by occupational activities (based on their attitude towards risk and compliance). Moreover, evasion can be tackled through competition or strategic uncertainty (due to different audit policies), public shaming (with potential reintegration in the society afterwards, thus preserving the emotional social control), increase of sympathy and empathy levels (Casagrande, Cagno, Pandimiglio, & Spallone, 2015;Christian & Alm, 2014).…”

“…Despite a high degree of complexity due to numerous variables simultaneously affecting behaviour of agents, these models have gained interest due to the higher flexibility and degree of control for analysing large populations composed of heterogeneous agents directly interacting with each other; an application of this method is mainly used for observations on evolutionary processes, replications of tax behaviour within a society or the effect of social networks on compliance decisions (see e.g. Andrei, Comer, & Koehler, 2014;Hashimzade, Myles, Page, & Rablen, 2014).…”