Evolutionary Inspection and Corruption Games

Abstract

We extend a standard two-person, non-cooperative, non-zero sum, imperfect inspection game, considering a large population of interacting inspectees and a single inspector. Each inspectee adopts one strategy, within a finite/infinite bounded set of strategies returning increasingly illegal profits, including compliance. The inspectees may periodically update their strategies after randomly inter-comparing the obtained payoffs, setting their collective behaviour subject to evolutionary pressure. The inspector decides, at each update period, the optimum fraction of his/her renewable budget to invest on his/her interference with the inspectees' collective effect. To deter the inspectees from violating, he/she assigns a fine to each illegal strategy. We formulate the game mathematically, study its dynamics and predict its evolution subject to two key controls, the inspection budget and the punishment fine. Introducing a simple linguistic twist, we also capture the corresponding version of a corruption game.

An Evolutionary Game to Study Banks–Firms Relationship: Monitoring Intensity and Private Benefit

“…This legal behavior may be defined, for example, by a control treaty, and the inspected has a potential interest in violating these rules. Typically, the inspector's resources are limited so that verification can only be partial [see Andreozzi (2010), Smojver (2012), Katsikas et al (2016), Holler (1993, Tsebelis (1989)]. Our results show that firms and banks have a predator-prey relationship as in the Lotka-Volterra model, when a mixed strategy Nash equilibrium exists.…”

A Stackelberg game for the Italian tax evasion problem

“…A second strand of literature relaxes the assumption of rationality and is based on evolutionary game theory (Weibull 1997). In Andreozzi (2002), Andreozzi (2010), Cressman et al (1998), Katsikas et al (2016) authors present models where agents are not assumed to be rational, rather they adapt their behavior over time from less profitable strategies to more profitable ones.…”

Multi-agent interaction and nonlinear Markov games

“…The analysis of system (2.103) for non-proportional fines is given in [125]. In cases of convex and concave dependence of fines on the profits, all fixed points turn out to be isolated and supported by only two pure strategies.…”

“…Closely related are the so-called inspection games, see surveys e. g. in [18], [144], [125]. Our evolutionary approach was initiated in [148], similar ideas can be found in [106].…”