Tax Evasion as a Global Game (TEGG) in the laboratory
AbstractSánchez Villalba (2009) claims tax evasion can be modelled as a global game when income shocks are common and prescribes that the tax agency should audit each individual taxpayer with a probability that is a non-decreasing function of every other taxpayer's declarations ("contingent policy rule"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the contingent policy rule is superior to the alternative "cut-off" one. It also finds that data fits the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-10.
Length: 46 pages
Date of creation: Mar 2010
Date of revision:
Publication status: Published by Ivie
Tax Evasion; Global Games; Experimental Economics; Rationality; Information; Beliefs.;
Find related papers by JEL classification:
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-03 (All new papers)
- NEP-EXP-2010-07-03 (Experimental Economics)
- NEP-PBE-2010-07-03 (Public Economics)
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