Cheer Me Up: A Game Theoretic Optimisation Analysis of the Relationships Between Morale, Corruption and Individual Tax Evasion Decisions

Head shot of Pragya Mittal

Name: Pragya Mittal
Majors: Mathematics and Economics
Advisor: Dr. Moses Luri

This paper asks the question, “what is the impact of morale on evasion, when corruption and harassment are also controlled for in addition to enforcement?” Attempting to answer it through optimisation and a game theoretic model, the findings from theory dictate that morale has a negative impact on evasion, enforcement has a negative impact on evasion, the tax rate has a positive impact on evasion, and that increasing internal audit rates and fines for corrupt activity can help reduce both corrupt activity and evasion, which is a strong effect. Some of these findings are empirically confirmed using an ordered probit model, which mainly finds that there exists a robust and significant negative relationship between morale and evasion as well as a robust and significant positive relationship between corruption and evasion. This, in addition to confirming the important theoretical finding that morale has a negative impact on evasion, further feeds into the observation that internal audits of tax officials checking for corrupt behaviour being one of the more efficient ways of reducing evasion.

Posted in Comments Enabled, Independent Study, Symposium 2022.

6 responses to “Cheer Me Up: A Game Theoretic Optimisation Analysis of the Relationships Between Morale, Corruption and Individual Tax Evasion Decisions”

  1. Brooke Krause says:

    It is so fun to see your research, Pragya! The decision tree and your theoretical model are impressive and I’m glad to see your strong econometrics skills in use!

  2. Deepak mittal says:

    Just great. Can not define my pride and enthusiasm to see Pragya doing this.

  3. Nick Finley says:

    Your game theoretical approach to this problem is truly fascinating. You have a bright future ahead of you

  4. Abrar Khondker says:

    So proud of you Pragya, you’re gonna do great things!!

  5. Rachel Osterhouse says:

    Pragya! You are so intelligent and amazing. Cant wait to see what you do in the future.

  6. Cher Kornma says:

    I have watched you blossom into an incredibly intelligent and driven person over the last four years and I am so proud of how far you have come. I can not wait to see what els you have in store. Continue to outshine!!

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