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.