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Optimal Policymaking under Yardstick Vote: An Experimental Study

Author

Listed:
  • Albert Argilaga

    (College of Civil Engineering and Architecture, Zhejiang University, Hangzhou 310058, China)

  • Jijian Fan

    (School of Economics, Zhejiang University, Hangzhou 310058, China
    Institute for Fiscal Big-Data and Policy, Zhejiang University, Hangzhou 310058, China)

Abstract

We develop a numerical model that simulates the evolution of a virtual population with an incentive and ability-based wage, capital yield from savings, social welfare system, and total income subject to taxation and political turnovers. Meta-heuristics, particle swarm optimization (PSO) in particular, is used to find optimal taxation given the constraints of a plurality democracy with yardstick vote. Results show that the policymaker tends to a taxation system that is highly punitive for a minority in order to win the election by benefiting others. Such decision-making leads to a cyclic taxation policy with high taxation targeting sequential portions of the population.

Suggested Citation

  • Albert Argilaga & Jijian Fan, 2022. "Optimal Policymaking under Yardstick Vote: An Experimental Study," Games, MDPI, vol. 13(3), pages 1-24, May.
    • Handle: RePEc:gam:jgames:v:13:y:2022:i:3:p:42-:d:827426
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    References listed on IDEAS

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