Decentralized deterrence, with an application to labor tax auditing

Edoardo Di Porto*, Nicola Persico, Nicolas Sahuguet

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


This paper studies a new strategic auditing game in which atomistic auditors maximize the success rate of audits, and provides a method to calibrate its parameters based on audit data. Calibrating the model to Italian auditing data, we provide an estimate of tax evasion based on (non-random) audit data alone. Counterfactual simulation of the model quantifies the costs and benefits of alternative auditing policies. We compare decentralized enforcement with a counterfactual "commitment policy," and compute the loss from the former.

Original languageEnglish (US)
Pages (from-to)35-62
Number of pages28
JournalAmerican Economic Journal: Microeconomics
Issue number1
StatePublished - Feb 2013

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance


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