Inspection—Corruption Game of Illegal Logging and Other Violations: Generalized Evolutionary Approach

Vassili N. Kolokoltsov
Additional contact information
Vassili N. Kolokoltsov: Department of Statistics, University of Warwick, Coventry CV4 7AL, UK

Mathematics, 2021, vol. 9, issue 14, 1-14

Abstract: Games of inspection and corruption are well developed in the game-theoretic literature. However, there are only a few publications that approach these problems from the evolutionary point of view. In previous papers of this author, a generalization of the replicator dynamics of the evolutionary game theory was suggested for inspection modeling, namely the pressure and resistance framework, where a large pool of small players plays against a distinguished major player and evolves according to certain myopic rules. In this paper, we develop this approach further in a setting of the two-level hierarchy, where a local inspector can be corrupted and is further controlled by the higher authority (thus combining the modeling of inspection and corruption in a unifying setting). Mathematical novelty arising in this investigation involves the analysis of the generalized replicator dynamics (or kinetic equation) with switching, which occurs on the “efficient frontier of corruption”. We try to avoid parameters that are difficult to observe or measure, leading to some clear practical consequences. We prove a result that can be called the “principle of quadratic fines”: We show that if the fine for violations (both for criminal businesses and corrupted inspectors) is proportional to the level of violations, the stable rest points of the dynamics support the maximal possible level of both corruption and violation. The situation changes if a convex fine is introduced. In particular, starting from the quadratic growth of the fine function, one can effectively control the level of violations. 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; substandard quality; evolutionary games; pressure and resistance games; dynamic law of large numbers; stable equilibria; approximate Nash equilibria; principle of quadratic fines; efficient frontier of corruption (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2227-7390/9/14/1619/pdf (application/pdf)
https://www.mdpi.com/2227-7390/9/14/1619/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jmathe:v:9:y:2021:i:14:p:1619-:d:591139

Access Statistics for this article

Mathematics is currently edited by Ms. Emma He

More articles in Mathematics from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().