On Effective Fine Functions for Inspection—Corruption Games (Evolutionary Approach)

Vassili N. Kolokoltsov () and Dmitri V. Vetchinnikov
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Vassili N. Kolokoltsov: Faculty of Computation Mathematics and Cybernetics, Moscow State University, 119991 Moscow, Russia
Dmitri V. Vetchinnikov: Higher School of Economics, University in Moscow, 109028 Moscow, Russia

Mathematics, 2023, vol. 11, issue 15, 1-11

Abstract: In previous papers of the authors, a generalized evolutionary approach was developed for the analysis of popular inspection and corruption games. Namely, a two-level hierarchy was studied, where a local inspector I of a pool of agents (that may break the law) can be corrupted and is further controlled by the higher authority A . Here, we extend this two-level modeling by answering the following questions: (i) what levels of illegal profit r of violators and what level of bribes α (fraction of illegal profit asked as a bribe from a violator) of an inspector are feasible, that is, realizable in stable equilibria of generalized replicator dynamics; and (ii) what α can be optimal for a corrupted inspector that aims at maximizing the total profit. Concrete settings that we have in mind are illegal logging, the sales of products with substandard quality, and tax evasion.

Keywords: inspection; corruption; illegal logging; tax evasion; evolutionary games; kinetic equations; pressure and resistance games; stable equilibria; approximate Nash equilibria; principle of quadratic fines (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
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