Basic income and labour incentives: A game theory approach

© 2016, Pontificia Universidad Catolica de Chile. All rights reserved. This paper discusses the likely impact on job incentives of the introduction of a Citizens’ Basic Income. We try to explore whether this proposal would fail because it would cause a massive retreat from the labour market or, on the contrary, this is not a plausible scenario and therefore the proposal is feasible and sustainable in this respect. To this aim, we use formal game theoretical models, since they have several advantages compared with simple intuitive mental speculation. The paper concludes that, as Basic Income supporters argue, the proposal is feasible and sustainable in the most empirically plausible scenarios.