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uni'wissen 01-2012_ENG

What do a cuckolded husband and a German Minister of Finance have in common? Both of them are in an awkward situation. Both of them have to make a decision. And neither of them know whether their decision will lead to success. The husband has to decide whether to leave his wife or to forgive her. The finance ­minister has to decide whether to burden the ­citizens with more taxes or not. Neither of them know how their respective audience – in the one case the wife, in the other the voter and taxpayer – will react, because they might be concealing their true opinion in their own self-interest. Only one thing is for certain in this compli­ cated situation, says the Freiburg economist Prof. Dr. Wolfgang Eggert: “However private and public actors decide, the results will often be painful.” Difficult situations like these, in which everyone wants the best result for him or her self and one or the other party is thus bound to come out disappointed, are referred to in game theory as dilemmas. Dilemmas can lurk every­ where: in private life just as in politics and the business world. Eggert loves to find the best ­solution to such problems – even in cases in which the situation actually seems hopeless. The public finance professor studies societal processes and their impact on the tax and finan­ cial sectors. What tax policy leads to the broad­ est level of satisfaction in the populace? And what effect does tax competition have? These are the kind of questions that pervade his work. “However private and public actors decide, the results will often be painful” 13