Tan, Fangfang and Yim, Andrew (2010): Deterrence Effects of Auditing Rules: An Experimental Study.
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This paper examines the deterrence effect of two auditing rules via a laboratory experiment. A traditional rule which is usually assumed in the auditing literature, audits a taxpayer with a constant probability, which is independent of others' tax returns. A bounded rule recently proposed and analyzed in the literature chooses a sample from the population of reported low-income taxpayers to audit, taking into account the capacity of the auditor. We �find that the deterrence effect of a bounded rule is as strong as that of a traditional rule, but is more cost-effective since fewer audits are conducted. The results lend further support to the bounded rule as a more cost-effective alternative to the traditional rule.
|Item Type:||MPRA Paper|
|Original Title:||Deterrence Effects of Auditing Rules: An Experimental Study|
|Keywords:||Audit sampling plan, tax audit, tax compliance, tax evasion, experimental economics.|
|Subjects:||C - Mathematical and Quantitative Methods > C9 - Design of Experiments
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M42 - Auditing
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance
|Depositing User:||Andrew Yim|
|Date Deposited:||06. Jan 2011 08:07|
|Last Modified:||02. Mar 2013 06:42|
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Available Versions of this Item
Deterrence Effects of Auditing Rules: An Experimental Study. (deposited 06. Jan 2011 08:07)
Deterrence Effects of Auditing Rules: An Experimental Study. (deposited 09. Jan 2011 22:07)
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