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Power and Taxes
Robert J. Aumann
Mordecai Kurz
Abstract
A treatment of taxation based on considerations of political and economic power in a majority-vote democratic context is the topic of this article. Agents are endowed with gross incomes and have concave von Neumann-Morgenstern utilities for money. Taxation policies are decided by majority vote, but each citizen retains a certain basic right that prevents the majority from arbitrarily expropriating his income. The resulting non-transferable utility cooperative game is analyzed by means of the Harsanyi-Shapley-Nash value.
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