The government-taxpayer game

David Carfì () and Caterina Fici

MPRA Paper from University Library of Munich, Germany

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).

Keywords: Government; taxpayer; tax; fiscal policy; tax evasion (search for similar items in EconPapers)
JEL-codes: E42 E62 G18 G28 G38 H21 H26 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-hpe, nep-iue and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38506

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