|
on Game Theory |
| By: | Dmitry Levando |
| Abstract: | We study coalition structure formation with intra and inter-coalition externalities in the introduced family of nested non-cooperative simultaneous finite games. A non-cooperative game embeds a coalition structure formation mechanism, and has two outcomes: an allocation of players over coalitions and a payoff for every player. Coalition structures of a game are described by Young diagrams. They serve to enumerate coalition structures and allocations of players over them. For every coalition structure a player has a set of finite strategies. A player chooses a coalition structure and a strategy. A (social) mechanism eliminates conflicts in individual choices and produces final coalition structures. Every final coalition structure is a non-cooperative game. Mixed equilibrium always exists and consists of a mixed strategy profile, payoffs and equilibrium coalition structures. We use a maximum coalition size to parametrize the family of the games. The non-cooperative game of Nash is a partial case of the model. The result is different from the Shapley value, a strong Nash, coalition-proof equilibria, core solutions, and other equilibrium concepts. We supply few non-cooperative coalition structure stability criteria. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.00711&r= |
| By: | Alexandre Chirat (Université Paris Ouest Nanterre - EconomiX); Guillaume Sekli (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France) |
| Abstract: | This article uses the main tools of cooperative game theory, the core of a game and the Shapley value, to tackle the challenge posed by corporate tax harmonization in order to fight profit shifting. More specifically, these tools are applied to provide a counterfactual evaluation and to assess the credibility of Saez and Zucman (2019) proposal to establish a minimum rate at 25% at the G7/G20 level. Based on the empirical data of Tørsløv et al. (2020), our main results are the following. First, at the G7 level, the more countries involved in the agreement, the more efficient it would be. Second, stability of cooperation at the G7 level can be achieved without giving up fairness consideration in the distribution of the surplus. We then extend our application to the G20 and show that these results do not hold anymore. Third, from this case, we conclude that not only the target rate matters in the perspective of international tax cooperation, but also the numbers of participants and their current effective rates. |
| Keywords: | International taxation, Tax cooperation, Profit shifting, Tax havens, Shapley value |
| JEL: | E62 C71 F42 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2021-04&r= |
| By: | Han Xiao; Tianhang Lu; Qizhi Fang |
| Abstract: | The multiple partners matching game is a cooperative profit-sharing game, which generalizes the classic matching game by allowing each player to have more than one partner. The core is one of the most important concepts in cooperative game theory, which consists all possible ways of allocating the total profit of the game among individual players such that the grand coalition remains intact. For the multiple partners matching game, the core may be empty in general [Deng et al., Algorithmic aspects of the core of combinatorial optimization games, Math. Oper. Res., 1999.]; even when the core is non-empty, the core membership problem is intractable in general [Biro et al., The stable fixtures problem with payments, Games Econ. Behav., 2018]. Thus we study approximate core allocations for the multiple partners matching game, and provide an LP-based mechanism guaranteeing that no coalition is paid less than $2/3$ times the profit it makes on its own. Moreover, we show that the factor $2/3$ is best possible in general, but can be improved depending on how severely constrained the players are. Our result generalizes the recent work of Vazirani [Vazirani, The general graph matching game: approximate core, arXiv, 2021] from matching games to multiple partners matching games. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.01442&r= |
| By: | Jung-Kyoo Choi; Jun Sok Huhh |
| Abstract: | This study investigates the effect of behavioral mistakes on the evolutionary stability of the cooperative equilibrium in a repeated public goods game. Many studies show that behavioral mistakes have detrimental effects on cooperation because they reduce the expected length of mutual cooperation by triggering the conditional retaliation of the cooperators. However, this study shows that behavioral mistakes could have positive effects. Conditional cooperative strategies are either neutrally stable or are unstable in a mistake-free environment, but we show that behavioral mistakes can make \textit{all} of the conditional cooperative strategies evolutionarily stable. We show that behavioral mistakes stabilize the cooperative equilibrium based on the most intolerant cooperative strategy by eliminating the behavioral indistinguishability between conditional cooperators in the cooperative equilibrium. We also show that mistakes make the tolerant conditional cooperative strategies evolutionarily stable by preventing the defectors from accumulating the free-rider's advantages. Lastly, we show that the behavioral mistakes could serve as a criterion for the equilibrium selection among cooperative equilibria. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.15994&r= |
| By: | Tongseok Lim |
| Abstract: | Lloyd S. Shapley \cite{Shapley1953a, Shapley1953} introduced a set of axioms in 1953, now called the {\em Shapley axioms}, and showed that the axioms characterize a natural allocation among the players who are in grand coalition of a {\em cooperative game}. Recently, \citet{StTe2019} showed that a cooperative game can be decomposed into a sum of {\em component games}, one for each player, whose value at the grand coalition coincides with the {\em Shapley value}. The component games are defined by the solutions to the naturally defined system of least squares linear equations via the framework of the {\em Hodge decomposition} on the hypercube graph. In this paper we propose a new set of axioms which characterizes the component games given by Stern and Tettenhorst, thereby suggesting that the component values for every coalition state may also serve for a valid measure of fair allocation among the players in each coalition. Our axioms may be seen as a completion of Shapley's in view of this characterization of the Hodge-theoretic component games. In addition, we provide a path integral representation of the component games which may be seen as an extension of the {\em Shapley formula}. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.15094&r= |
| By: | Frederic Koessler; Marco Scarsini; Tristan Tomala |
| Abstract: | We define the notion of Bayes correlated Wardrop equilibrium for general nonatomic games with anonymous players and incomplete information. Bayes correlated Wardrop equilibria describe the set of equilibrium outcomes when a mediator, such as a traffic information system, provides information to the players. We relate this notion to Bayes Wardrop equilibrium. Then, we provide conditions -- existence of a convex potential and complete information -- under which mediation does not improve equilibrium outcomes. We then study full implementation and, finally, information design in anonymous games with a finite set of players, when the number of players tends to infinity. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.06312&r= |
| By: | Benjamin Patrick Evans; Mikhail Prokopenko |
| Abstract: | While game theory has been transformative for decision-making, the assumptions made can be overly restrictive in certain instances. In this work, we focus on some of the assumptions underlying rationality such as mutual consistency and best-response, and consider ways to relax these assumptions using concepts from level-$k$ reasoning and quantal response equilibrium (QRE) respectively. Specifically, we provide an information-theoretic two-parameter model that can relax both mutual consistency and best-response, but can recover approximations of level-$k$, QRE, or typical Nash equilibrium behaviour in the limiting cases. The proposed approach is based on a recursive form of the variational free energy principle, representing self-referential games as (pseudo) sequential decisions. Bounds in player processing abilities are captured as information costs, where future chains of reasoning are discounted, implying a hierarchy of players where lower-level players have fewer processing resources. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.15844&r= |
| By: | Luke A. Boosey (Department of Economics, Florida State University); Christopher Brown (Krannert School of Management, Purdue University) |
| Abstract: | We study competitive behavior in all-pay Tullock (1980) contests with identity-dependent externalities (IDEs) governed by a fixed network. First, we introduce a model of network contest games, in which the prize generates an externality---which may be positive or negative---that impacts each player directly connected by the network to the winner of the contest. We establish existence of Nash equilibria and provide sufficient conditions for uniqueness, building on recent theoretical advances for games played on networks. We then derive closed-form results, with an intuitive characterization, for regular networks and for a subclass of core-periphery structures. Second, using a controlled laboratory experiment, we provide robust empirical support for the comparative statics predictions of the model. Our experimental findings also suggest that observed patterns of mean over-investment relative to point predictions may be driven by both heterogeneous joy of winning and social efficiency concerns that emerge in the presence of IDEs. Altogether, our study provides a novel application for the theory of network games, and new insights regarding behavior in all-pay contests. |
| Keywords: | contests, networks, identity-dependent externalities, network games, best-response potential, experiment, joy of winning |
| JEL: | C72 C92 D72 D74 D85 Z13 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2021_07_02&r= |
| By: | Tongseok Lim |
| Abstract: | We define cooperative games on general graphs and generalize Lloyd S. Shapley's celebrated allocation formula for those games in terms of stochastic path integral driven by the associated Markov chain on each graph. We then show that the value allocation operator, one for each player defined by the stochastic path integral, coincides with the player's component game which is the solution to the least squares (or Poisson's) equation, in light of the combinatorial Hodge decomposition on general weighted graphs. Several motivational examples and applications are also presented. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.10510&r= |
| By: | Ren\'e Carmona; Mathieu Lauri\`ere |
| Abstract: | Financial markets and more generally macro-economic models involve a large number of individuals interacting through variables such as prices resulting from the aggregate behavior of all the agents. Mean field games have been introduced to study Nash equilibria for such problems in the limit when the number of players is infinite. The theory has been extensively developed in the past decade, using both analytical and probabilistic tools, and a wide range of applications have been discovered, from economics to crowd motion. More recently the interaction with machine learning has attracted a growing interest. This aspect is particularly relevant to solve very large games with complex structures, in high dimension or with common sources of randomness. In this chapter, we review the literature on the interplay between mean field games and deep learning, with a focus on three families of methods. A special emphasis is given to financial applications. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.04568&r= |
| By: | Peter A. Streufert |
| Abstract: | This paper specifies an extensive form as a 5-ary relation (i.e. set of quintuples) which satisfies certain abstract axioms. Each quintuple is understood to list a player, a situation (e.g. information set), a decision node, an action, and a successor node. Accordingly, the axioms are understood to specify abstract relationships between players, situations, nodes, and actions. Such an extensive form is called a "5-form", and a "5-form game" is defined to be a 5-form together with utility functions. The paper's main result is to construct a bijection between (a) those 5-form games with information-set situations and (b) $\mathbf{Gm}$ games (Streufert arXiv:2105.11398). In this sense, 5-form games equivalently formulate almost all extensive-form games. An application weakens the tree axiom in the presence of the other axioms, which leads to a convenient decomposition of 5-forms. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.10801&r= |
| By: | Panagiotis Kanellopoulos; Maria Kyropoulou; Hao Zhou |
| Abstract: | We study financial systems from a game-theoretic standpoint. A financial system is represented by a network, where nodes correspond to firms, and directed labeled edges correspond to debt contracts between them. The existence of cycles in the network indicates that a payment of a firm to one of its lenders might result to some incoming payment. So, if a firm cannot fully repay its debt, then the exact (partial) payments it makes to each of its creditors can affect the cash inflow back to itself. We naturally assume that the firms are interested in their financial well-being (utility) which is aligned with the amount of incoming payments they receive from the network. This defines a game among the firms, that can be seen as utility-maximizing agents who can strategize over their payments. We are the first to study financial network games that arise under a natural set of payment strategies called priority-proportional payments. We investigate the existence and (in)efficiency of equilibrium strategies, under different assumptions on how the firms' utility is defined, on the types of debt contracts allowed between the firms, and on the presence of other financial features that commonly arise in practice. Surprisingly, even if all firms' strategies are fixed, the existence of a unique payment profile is not guaranteed. So, we also investigate the existence and computation of valid payment profiles for fixed payment strategies. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.06623&r= |
| By: | Andrea Attar (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Eloisa Campioni (Unknown); Thomas Mariotti (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique); Alessandro Pavan (Unknown) |
| Abstract: | We study games in which several principals contract with several privately-informed agents. We show that enabling the principals to engage in contractible private disclosures – by sending private signals to the agents about how the mechanisms will respond to the agents' messages – can significantly affect the predictions of such games. Our first result shows that private disclosures may generate equilibrium outcomes that cannot be supported in any game without private disclosures, no matter the richness of the message spaces and the availability of public randomizing devices. The result thus challenges the canonicity of the universal mechanisms of Epstein and Peters (1999). Our second result shows that equilibrium outcomes of games without private disclosures need not be sustainable when private disclosures are allowed. The result thus challenges the robustness of the "folk theorems" of Yamashita (2010) and Peters and Troncoso-Valverde (2013). These findings call for a novel approach to the analysis of competing-mechanism games. |
| Keywords: | Incomplete Information,Competing Mechanisms,Private Disclosures,Signals,Universal Mechanisms,Folk Theorems. |
| Date: | 2021–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03266804&r= |
| By: | Herings, P. Jean-Jacques (RS: GSBE Theme Data-Driven Decision-Making, RS: GSBE Theme Conflict & Cooperation, Microeconomics & Public Economics); Mauleon, Ana; Vannetelbosch, Vincent |
| Abstract: | We study the criminal networks that will emerge in the long run when criminals are neither myopic nor completely farsighted but have some limited degree of farsightedness. We adopt the horizon-K farsighted set of Herings, Mauleon and Vannetelbosch (2019) to answer this question. We find that in criminal networks with n criminals, the set consisting of the complete network is a horizon-K farsighted set whenever the degree of farsightedness of the criminals is larger than or equal to (n 1). Moreover, the complete network is the unique horizon-(n 1) farsighted set. Hence, the predictions obtained in case of completely farsighted criminals still hold when criminals are much less farsighted. |
| JEL: | A14 C70 D20 |
| Date: | 2021–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2021008&r= |
| By: | Michael Kuroda (Economic Science Institute, Chapman University); Jieran Li (Economic Science Institute, Chapman University); Jason Shachat (Durham University and Wuhan University); Lijia Wei (Wuhan University); Bochen Zhu (Wuhan University) |
| Abstract: | We study whether cross- and within-culture groups have different cooperation rates in the Prisoner’s Dilemma Game. In an experiment, university students in China and America engage in a single iteration of the game, complete belief elicitation tasks regarding their opponents’ play and take a survey including attitudinal measurements regarding their in- and out-group attitudes. Cooperation rates are higher across the two countries are higher in both cross-culture and in within-culture interactions, although not significantly. We also find that Chinese participants cooperate less than American ones. Further, female Chinese participants are more cooperative than Chinese male ones. In the cross-culture treatment, Chinese participants underestimate the likelihood of cooperative behavior of their American counterparts, while Americans overestimate the same likelihood of their Chinese counterparts. Our results also show that Chinese participants cooperate more conditionally than American ones. Finally, while we find some attitudinal in- and out-biases both they do not generate meaningful impact on cooperative behavior. |
| Keywords: | Cross-culture; Prisoner’s Dilemma; Cooperation; Experiment |
| JEL: | C72 C92 D91 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-14&r= |
| By: | Gaurab Aryal; Federico Zincenko |
| Abstract: | We propose an empirical framework for Cournot oligopoly with private information about costs. First, considering a linear demand with a random intercept, we characterize the Bayesian Cournot-Nash equilibrium and determine its testable implications. Then we establish nonparametric identification of the joint distribution of demand and technology shock and firm-specific cost distributions. Finally, we propose a likelihood-based estimation method and apply it to the global crude oil market. Using counterfactuals, we also quantify the effect of firms sharing information about their costs on consumer welfare. We also extend the model to include either firm-specific conduct parameters, nonlinear demand, or selective entry. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.15035&r= |
| By: | Philippe Jehiel; Konrad Mierendorff |
| Abstract: | We consider auction environments in which at the time of the auction bidders observe signals about their ex-post value. We introduce a model of novice bidders who do not know know the joint distribution of signals and instead build a statistical model relating others' bids to their own ex post value from the data sets accessible from past similar auctions. Crucially, we assume that only ex post values and bids are accessible while signals observed by bidders in past auctions remain private. We consider steady-states in such environments, and importantly we allow for correlation in the signal distribution. We first observe that data-driven bidders may behave suboptimally in classical auctions such as the second-price or first-price auctions whenever there are correlations. Allowing for a mix of rational (or experienced) and data-driven (novice) bidders results in inefficiencies in such auctions, and we show the inefficiency extends to all auction-like mechanisms in which bidders are restricted to submit one-dimensional (real-valued) bids. |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2107.00640&r= |
| By: | Syngjoo Choi (Institute for Fiscal Studies); Byung-Yeon Kim (Institute for Fiscal Studies); Jungmin Lee (Institute for Fiscal Studies and University of Arkansas); Sokbae (Simon) Lee (Institute for Fiscal Studies and Columbia University and IFS) |
| Abstract: | We compare two groups of the non-student Korean population—native-born South Koreans (SK) and North Korean refugees (NK)—with contrasting institutional and cultural backgrounds. In our experiment, the subjects play dictator games under three different treatments in which the income source varies: first, the income is randomly given to the subject; second, it is earned by the subject; third, it is individually earned by the subject and an anonymous partner and then pooled together. We find that preferences for giving depend on the income source in different ways for the SK and NK subjects. The SK subjects become more selfish when the income is individually earned than when it is gifted to them. Furthermore, the NK subjects are not responsive to the earned income treatment but behave more pro-socially when individually earned incomes are pooled. The NK subjects behave in a more self-interested manner when they participated in market activities in North Korea. |
| Date: | 2019–12–09 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:70/19&r= |
| By: | Shuige Liu; Fabio Maccheroni |
| Abstract: | This paper provides a robust epistemic foundation for predicting and implementing collective actions when only the proportions that take specific actions in the population matter. We apply $\Delta$-rationalizability to analyze strategic sophistication entailed in (structural) quantal response equilibrium (QRE); the former is called $\Delta(p)$-rationalization to emphasize the only requirement on first-order beliefs is that they should be consistent with the transparent knowledge of the distributions of errors in the population. We show that each QRE is a $\Delta(p)$-rationalizable outcome. We also give conditions under which the converse also holds, and prove that the condition is almost never satisfied in generic games. It implies that QRE may be too demanding as a predictor in general, and $\Delta(p)$-rationalizable outcomes can be a robust benchmark to start from. |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2106.16081&r= |
| By: | Manon François (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We study the choice between source-based and destination-based corporate taxes in a twocountry model, allowing multinational firms to use transfer pricing to allocate profits across tax jurisdictions. We show that source-based taxation is a Nash equilibrium for tax revenue maximizing jurisdictions if domestic and/or foreign firms generate large revenues. We also show that destination-based taxes are a Nash equilibrium when firms generate low revenues, which implies the presence of multiple equilibria. Both the source and the destination principle coexist in equilibrium when domestic and foreign corporate revenues are average. However, the source principle always Pareto-dominates the destination principle. |
| Keywords: | Corporate taxes,Multinational firms,Tax competition,Transfer pricing |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03265056&r= |
| By: | Lara Ezquerra (Universidad de las Islas Baleares, Spain); Joaquin Gomez-Minambres (Lafayette College, Department of Economics and Chapman University, Economic Science Institute.); Natalia Jiminez (Universidad Pablo Olavide, Spain); Praveen Kujal (Middlesex University) |
| Abstract: | The implications of (public or private) pre-play communication and information revelation in a labour relationship is not well understood. We address these implications theoretically and experimentally. In our baseline experiments, the employer offers a wage to the worker who may then accept or reject it. In the public and private treatment, workers, moving first, make a non-binding private or public wage proposal. Our theoretical model assumes that wage proposals convey information about a worker's minimum acceptable wage and are misreported with a certain probability. It predicts that, on average, wage proposals lead to higher wage offers and acceptance rates, with the highest wages under private proposals. While both, public and private, proposals increase efficiency over the baseline, private proposals generate higher worker incomes. Broad support for the theoretical predictions is found in the laboratory experiments. Our work has important implications for recent policies promoting public information on wage negotiations. We find that while wage proposals promote higher wages, efficiency, and income equality, public information on wage negotiations is likely to benefit firms more than workers. |
| Keywords: | wage negotiations, cheap talk, laboratory experiments, ultimatum game, wage proposals |
| JEL: | C90 C72 J31 M52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-12&r= |
| By: | Manuel Amador; Christopher Phelan |
| Abstract: | This paper presents a continuous-time reputation model of sovereign debt allowing for both varying levels of partial default and full default. In it, a government can be a non-strategic commitment type, or a strategic opportunistic type, and a government's reputation is its equilibrium Bayesian posterior of being the commitment type. Our equilibrium has that for bond levels reachable by both types without defaulting, bigger partial defaults (or bigger haircuts for bond holders) imply higher interest rates for subsequent bond issuances, as in the data. |
| JEL: | F34 F41 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28997&r= |
| By: | Can, Burak (RS: FSE DKE Mathematics Centre Maastricht, Data Analytics and Digitalisation, RS: GSBE other - not theme-related research); Hougaard, Jens Leth; Pourpouneh, Mohsen |
| Abstract: | This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and results in two new fairness criteria, absolute and relative redistribution. These criteria impose that the addition of a share to the pool affects all previous shares in the same way, either in absolute amount or in relative ratio. We characterize two large classes of economically viable reward sharing schemes corresponding to each of these fairness criteria in turn. We further show that the intersection of these classes brings about a generalization of the well-known proportional scheme, which also leads to a new characterization of the proportional scheme as a corollary. |
| JEL: | D63 G20 L86 D31 |
| Date: | 2021–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2021009&r= |
| By: | Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (CNRS - Centre National de la Recherche Scientifique, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Antoine Malézieux (CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)) |
| Abstract: | Does giving taxpayers a voice over the destination of tax revenues lead to more honest income declarations? Previous experiments have shown that giving participants the opportunity to select the organization that receives their tax funds tends to increase tax compliance. The aim of this paper is to assess whether this increase in compliance is induced by the sole fact of giving subjects a choice — a "direct democracy effect". To that aim, we ask participants to a tax evasion game to choose, in a collective or individual choice setting, between two very similar organizations which provide the same social (ecological) benefits. We elicit compliance for both organizations before the choice is made so as to control for the counter-factual compliance decision. We find that democracy does not increase compliance, and even observe a slight negative effect — in particular for women. Our results confirm the existence of a commitment effect of democracy, leading to favor more the selected organization when it was actively chosen. The commitment effect of democracy is however not enough to overcome the decrease in the level of compliance. Thanks to response times data, we show that prior choice on similar options as compared to a purely random selection weakens the preference for honesty. One important field application of our results is that democracy in tax spending must offer real choices to tax payers to improve compliance. |
| Keywords: | Commitment,Direct democracy effect,Voting,Tax evasion game |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-03277339&r= |