ON THE 'FREE-RIDER', CONDITIONAL PROBABILITIES, AND RECURSIVE GAMES.

Abstract

The problem of 'free-riding', which is connected with the notion of a public good or externality, is treated as a question of tax compliance. It is shown that tax evasion is largely a problem of strategy. A Bayesian model is used to deduce an optimal strategy for the inspector faced with finding the tax evader. Individual auditing of a firm is described in terms of a recursive game model (inspector's game) from which one obtains minimax probabilities of detecting at least one violation. This last model is extended to comprise absolute banking secrecy and 'obvious' violations. (Author)

Document Details

Document Type
Technical Report
Publication Date
Dec 01, 1968
Accession Number
AD0687686

Entities

People

  • Heinz A. Schleicher

Organizations

  • Princeton University

Tags

DTIC Thesaurus Topics

  • Auditing
  • Bayesian Networks
  • Mathematics
  • Models
  • Probabilistic Models
  • Probability
  • Probability Distributions

Readers

  • Game Theory.
  • Government and Public Administration Law.
  • Theoretical Analysis.

Technology Areas

  • AI & ML
  • AI & ML - Bayesian Inference
  • AI & ML - Machine Learning Algorithms