Evolutionary dynamics of compliance in a two-population game of auditors and taxpayers

The paper studies the dynamics of compliance in a population of taxpayers that can decide whether to engage in tax evasion. In addition, these agents are subject to control by auditors who also choose to engage in dishonest behavior and request a bribe for not reporting detected tax evasion. We investigate the rich, dynamic scenarios that may arise through the interaction of auditors and taxpayers and describe how corruption cycles may emerge. •We study a two-population evolutionary game of compliance and tax evasion.•Social pressure is a function of the current level of honesty in the population.•When tax morale is strong, convergence to widespread honesty is a possible outcome.•Weak tax morale implies diffuse dishonesty or its coexistence with honesty.•Mild social pressure produces corruption cycles in the long run.