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Questions and Answers
What is the effect of an increase in the probability of detection according to Figure 3?
What is the effect of an increase in the probability of detection according to Figure 3?
- The optimal choice moves further away from X = Y
- The income declared decreases
- The optimal choice moves closer to X = Y (correct)
- Evasion increases
How does an increase in the fine rate (F) affect evasion, as stated in the text?
How does an increase in the fine rate (F) affect evasion, as stated in the text?
- Evasion increases
- The optimal choice moves further away from an honest declaration
- The effect on income is not clear-cut
- The optimal choice moves closer to an honest declaration (correct)
What happens when the tax rate (t) increases, as discussed in Figure 5?
What happens when the tax rate (t) increases, as discussed in Figure 5?
- Tax evasion is reduced (correct)
- Risk aversion increases with income
- The opportunity line shifts outward
- Income declared decreases
Why does the Yitzhaki puzzle arise according to the text?
Why does the Yitzhaki puzzle arise according to the text?
In Prospect Theory, what conditions make it interesting?
In Prospect Theory, what conditions make it interesting?
Why does the addition of loss aversion lead to a decrease in predicted evasion?
Why does the addition of loss aversion lead to a decrease in predicted evasion?
How does the economic analysis of tax compliance using expected utility theory compare to real-world compliance?
How does the economic analysis of tax compliance using expected utility theory compare to real-world compliance?
What is Pareto Efficiency in the context of the Prisoner's Dilemma game?
What is Pareto Efficiency in the context of the Prisoner's Dilemma game?
What strategy characterizes Tit-for-Tat in a repeated game like the Prisoner's Dilemma?
What strategy characterizes Tit-for-Tat in a repeated game like the Prisoner's Dilemma?
What is a possible explanation for rational co-operation in repeated games?
What is a possible explanation for rational co-operation in repeated games?
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