The government-taxpayer game

Carfì, David and Fici, Caterina (2012): The government-taxpayer game.

Abstract

In this paper, we model - quantitatively – a possible realistic interaction between a tax-payer and his Government. We formalize, in a general setting, this strategic interaction. Moreover, we analyze "completely" a particular realistic sample of the general model. We determine the entire payoff space of the sample game; we find the unique Nash equilibrium of the interaction; we determine the payoff Pareto maximal boundary, conservative payoff zone and the conservative core of the game (part of Pareto boundary greater than the conservative payoff vector). Finally, we suggest possible compromise solutions between the two players. From an economic point of view, the sample chosen gives an example of normative settings, for which there is no reason (convenience), for the tax-payer, to evade the taxes or to declare less than his real income. Moreover, the two proposed compromise solutions (which realize the maximum collective gain) could be significantly applied to distinguished tax-payer (big companies and so on).

• Item Type: MPRA Paper
• Language: English
• Keywords: Government; taxpayer; tax; fiscal policy; tax evasion
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems; G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance

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