Vitaly Pruzhansky () (Faculty of Economics and Business Administration, Vrije Universiteit Amsterdam)
Abstract
We study the phenomenon of tax evasion using a simple signaling model, in which the signal is taxpayer's reported income. The novelty of our approach lies in the way we define honesty. Specifically, we advocate the view that there are no absolutely honest taxpayers: all taxpayers may under certain conditions become evaders. We investigate the implications of this type of honesty on the equilibria of the model, and compare it to the basic case, in which honesty is absent. Our analysis completely characterizes all perfect Bayesian Nash equilibria of the game, assesses their stability and welfare properties.
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Hans Jørgen Jacobsen & Mogens Jensen & Birgitte Sloth, 1998.
"Evolutionary Learning in Signalling Games,"
CIE Discussion Papers
1999-14, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Sep 1999.
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