Crime games cannot be simply read with mixed strategies. These strategies are inconclusive on how the players act rationally. This is undeniably true for the crime of tax evasion, where dishonest taxpayers are rational agents, motivated by the comparison of payoffs, when considering the risk of non-compliance. In the presence of a small “private disturbance” of the players’ payoff, the Nash equilibrium in mixed strategies provides us with the necessary information on equilibria in pure strategies that will be played. In this context, tougher sentencing deters crime although, as the Italian experience teaches, the necessary condition required is the certainty of punishment and the ability of the government to enforce it. The equilibrium strategies with incomplete information reveal whether it is convenient for the two agents to maintain their "private disturbance" as private information or, on the contrary, whether it is convenient to expect it to be "common knowledge".

A strategic approach for the crime of tax evasion

Chiarini Bruno;Marzano Elisabetta
2019-01-01

Abstract

Crime games cannot be simply read with mixed strategies. These strategies are inconclusive on how the players act rationally. This is undeniably true for the crime of tax evasion, where dishonest taxpayers are rational agents, motivated by the comparison of payoffs, when considering the risk of non-compliance. In the presence of a small “private disturbance” of the players’ payoff, the Nash equilibrium in mixed strategies provides us with the necessary information on equilibria in pure strategies that will be played. In this context, tougher sentencing deters crime although, as the Italian experience teaches, the necessary condition required is the certainty of punishment and the ability of the government to enforce it. The equilibrium strategies with incomplete information reveal whether it is convenient for the two agents to maintain their "private disturbance" as private information or, on the contrary, whether it is convenient to expect it to be "common knowledge".
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11367/68729
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