Tax Evasion as a Global Game (TEGG) in the laboratory

Miguel Sanchez Villalba

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: Sánchez Villalba (2009) claims tax evasion can be modelled as a global game when income shocks are common and prescribes that the tax agency should audit each individual taxpayer with a probability that is a non-decreasing function of every other taxpayer's declarations ("contingent policy rule"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the contingent policy rule is superior to the alternative "cut-off" one. It also finds that data fits the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics.

Keywords: Tax Evasion; Global Games; Experimental Economics; Rationality; Information; Beliefs. (search for similar items in EconPapers)
JEL-codes: C72 C91 D82 H26 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010-03
New Economics Papers: this item is included in nep-exp and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2010-10

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