Optimal Policymaking under Yardstick Vote: An Experimental Study

Albert Argilaga and Jijian Fan
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Albert Argilaga: College of Civil Engineering and Architecture, Zhejiang University, Hangzhou 310058, China
Jijian Fan: School of Economics, Zhejiang University, Hangzhou 310058, China

Games, 2022, vol. 13, issue 3, 1-24

Abstract: We develop a numerical model that simulates the evolution of a virtual population with an incentive and ability-based wage, capital yield from savings, social welfare system, and total income subject to taxation and political turnovers. Meta-heuristics, particle swarm optimization (PSO) in particular, is used to find optimal taxation given the constraints of a plurality democracy with yardstick vote. Results show that the policymaker tends to a taxation system that is highly punitive for a minority in order to win the election by benefiting others. Such decision-making leads to a cyclic taxation policy with high taxation targeting sequential portions of the population.

Keywords: voting; yardstick competition; decision-making; optimal tax; simple majority; meta-heuristics; particle swarm optimization (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2022
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