This study aims to examine the economic decision-making behavior within households, with a particular focus on whether individuals engage in intra-household communication to achieve decisions that are Pareto efficient—that is, outcomes in which no individual can be made better off without making another worse off. The research contrasts two behavioral scenarios: one in which household members coordinate and negotiate with the objective of maximizing collective welfare, and another in which individuals act independently, pursuing unilateral utility maximization without mutual consultation.
Using comprehensive income tax return data from Taiwan’s Ministry of Finance, this study investigates whether household members strategically engage in cooperative tax planning to reduce their total tax liability, or whether they default to individual tax filing behavior, potentially resulting in suboptimal outcomes where additional taxable income is unnecessarily exposed to government collection. By identifying whether households tend toward cooperative, Pareto-efficient decisions or instead exhibit fragmented and inefficient behavior, the study contributes to a broader understanding of intra-household economics and fiscal behavior.