Review of Behavioral Economics > Vol 3 > Issue 1

Simulations in Tax Compliance Research: What Are They Good For?

Aloys Prinz, University of Münster, Germany, Aloys.Prinz@wiwi.uni-muenster.de
 
Suggested Citation
Aloys Prinz (2016), "Simulations in Tax Compliance Research: What Are They Good For?", Review of Behavioral Economics: Vol. 3: No. 1, pp 20-46. http://dx.doi.org/10.1561/105.00000042

Published: 20 Apr 2016
© 2016 A. Prinz
 
Subjects
Public Economics: Internal Taxation,  Public Economics: Public Finance,  Public policy,  Information Systems Research Methods,  Information Systems Research Methods: Philosophy
 

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In this article:
1. Introduction
2. From Economic Logic to Psychology: ‘Possibility’ and ‘Actuality’ in Tax Compliance Research
3. Simulation Approaches in Tax Compliance Research
4. The scientific range of simulations: Complicacy vs. complexity, qualitative vs. quantitative research
5. Strengths and limits of simulation studies on tax compliance and evasion
6. Conclusion
References

Abstract

Experimental research is nowadays evidently the ‘gold standard’ of tax research. Simulations, especially with the so-called ‘agentbased models,’ are commonly used in economics as a research tool. Based on theoretical models, empirical results, and insights gained from experiments, simulations enable the study of whole societies structured by networks of agents, with respect to collective rather than individual reactions to taxation. The quality of the results, however, depends among other things on the inputs from empirical and experimental research employed to calibrate simulation models, as well as the structure of agent networks. Although simulations cannot in fact provide better explanations of tax compliance and evasion than economic and psychological research, they are nevertheless a new tool of research that yields additional insight into the aggregate dynamic behavior of agents in tax policy regimes.

DOI:10.1561/105.00000042

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