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Global Inspection Games (GIG) in the laboratory

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  • Sanchez Villalba, Miguel

Abstract

Sanchez Villalba (2015) claims inspection games can be modelled as global games when agents face common shocks. For the tax evasion game -his leading example- he 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 ("relative auditing strategy"). This paper uses experimental data to test the predictions of the model and finds supporting evidence for the hypothesis that the relative auditing strategy is superior to the alternative "cut-off" one. It also finds that data fit the qualitative predictions of the global game model, regarding both participants' decisions and the experiment's comparative statics.

Suggested Citation

  • Sanchez Villalba, Miguel, 2017. "Global Inspection Games (GIG) in the laboratory," MPRA Paper 80715, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80715
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    References listed on IDEAS

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    More about this item

    Keywords

    Global Games; Experimental Economics; Tax Evasion; Rationality; Information; Beliefs;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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