No abstract

Experiments on three two-person threshold public good provision games, namely, the simultaneous, sequential, and dictator games, are conducted to explore the motives behind giving. Players who move simultaneously are endowed with equal bargaining power, and players who move first are endowed with more bargaining power than players who move subsequently. Dictators are indubitably endowed with complete bargaining power. Since the differences between the bargaining powers of two players increase from the simultaneous to the sequential to the dictator game, comparisons among games allow us to trace whether the contribution behavior is motivated by fairness or is simply due to the strategic concern. The experimental evidence shows that the strategic concern explains the overall contribution behavior better than the motive of fairness. However, in the final round 26% of the dictators share the threshold evenly with their opponents, suggesting that some subjects do play fairly.

This article examines a model in which two jurisdictions engage in fiscal competition. The jurisdictions’ strategic variables are labor tax rates and types of local public goods. Both are determined by majority voting. The article finds that in Nash equilibrium, labor tax rates will be efficiently chosen such that quantities of local public goods will achieve the first-best level. Furthermore, there are two symmetric Nash equilibria for the types of local public goods. These two equilibria, when they both exist, exhibit less public sector differentiation than if there were no mobility. However, a primary difference between them is that when the net gain of more population increases, in one equilibrium jurisdictions will raise the similarity of local public goods to attract population, but in the other equilibrium jurisdictions will differentiate themselves more to prevent harsh competition.

This article offers experimental evidence to examine an important case in politics where a monopolistic proposer seeks a majority's consent from competitive responders to split the gain. The unique subgame perfect equilibrium prediction is that the side of trade with a monopoly will exploit the side of trade with competition to reap almost all of the gain. Our experimental evidence reveals that while responders do compete with each other to race to the bottom (consistent with the prediction), the monopolistic proposer settles down to offer a ‘fair’ share of the pie to those from whom he or she seeks majority support (contrary to the prediction).

Prior experimental studies on tax evasion generally assume that the budget and the probability of audit are exogenously given, and ignore taxpayers' incentives to detect evasion and their compliance behaviour under such incentives. The experimental evidence of the present paper shows that, on average, subjects are willing to spend 20 to 30% of their tax revenue on auditing. Compliance is also greatly improved if subjects can determine the budget and, hence, the probability of audit. These findings suggest that taking taxpayers' incentives to detect evasion into consideration is important for the design of compliance-improvement audit schemes.