behavior of investors and government in the process of decision-making related to financing designed
to reduce risks in investment activity.
Methodology: Considering the interdependent type (nature) of interactions between related parties,
game theory tools were used to model such interactions. Much attention was directed to search for
parameters of interaction leading to certain Nash equilibriums in pure strategies. The formal results
obtained with the model were verified by statistical analysis.
Findings: Analysis showed that the rational behavior of related parties can lead to unexpected
results. Powerful investors will aim to work in socially-oriented economies, whereas primarily
small investors will operate in most liberal economies with a minimum tax burden but with a higher
level of risk. As for governments’ behaviors, the images are the same: small economies tend to
liberalize their tax systems and to secure investment faster than powerful ones. Empirical verification
based on statistical data of groups of countries generally confirmed the conclusions. These
formal and logical conclusions were from statistical analysis of 124 countries divided into 5 groups:
OECD countries, post-socialist countries, Latin American countries, APAC countries and ACP
countries. Provided that the more powerful ones are covered economies, there was stronger interdependence
between the size of economies and tax burden and also between total investment and
tax burden, where this dependence is positive.
Originality: The results obtained used Nash equilibriums in pure strategies as models of behavioral
norms to define behaviors of related parties and also to explain assumptions concerning the
behaviors of investors and government.