Controlling Tax Evasion without Audit using Game Theory

In this paper, we introduce a new solution to tax evasion problem using game theory. Most of the papers investigating tax evasion model the game between government and taxpayer and calculate the probability of audit and evasion. However, the game played in this paper has changed the structure of game between government and taxpayers and models a game between taxpayers. In fact, government is not a player here and just imposes some rules that affect the outcomes of the game. The results show that in equilibrium, government manages to take the logical tax without audit and so taking cost.