【正文】 t may result in a failed audit. Specifically, we examine the potential for misstatement of the financial statements by the client and the level of auditing effort to detect or prevent misstatements by the auditor. While game theory has been monly used in a variety of audit contexts, only once (Cushing, 1999) has a wellknown game been used to model an audit context. Cushing (1999) used the prisoner’s dilemma game to model the issue of opinion shopping. Other authors construct mathematically plex games to model a specific audit issue or set of issues. The advantage of Cushing’s (1999) use of a wellknown game is in its intuition and understandability to those less familiar with more mathematical or rigorous game theory applications.The purpose of our paper is to use the wellknown game of chicken and the lesserknown but related welfare game to provide better intuition for and understanding of the game theoretic relationship between client and auditor and the literature relating game theory and auditing. Further, our paper considers as paramount the role of client and auditor ethics underlying the framework of the above games. We show that some failed audits are unavoidable if clients are unethical。 auditors do not detect all client misstatements. However, we show that higher auditor ethics result in more ethical practices (play) by unethical clients. We also discuss the importance of auditor assessment of client ethics and how this assessment will dictate auditor practices (play within games).The game of chicken and the auditIn the game of chicken, there are two players, say Andy and Chuck, who start at different ends of the road. Chuck drives north down the road while Andy drives south down the same road at the same time. As they move closer to each other and face a possible collision, they each have to chose an action to stay on the road or swerve off the road (chicken). If only one player swerves, he loses face。 the player who stays gains respect and glory. If both players stay, then both players will crash and receive the lowest payoff. If both players swerve, they both experience some embarrassment and lose a little face.The solution to this game relies on the symmetry of the game。 that is, each player has the same choice of actions with the same payoffs. Hence, the strategy for both players will be the same. Further, the payoff to a player from playing either stay or swerve must also be the same. If a is the probability of either player playing stay, then the solution to the below equation represents equilibrium condition.(Payoff from swerve)= (a) (0) + (1 – a) (1)= (a) (–3) + (1 – a) (2)= (Payoff from stay)This equation easily reduces to (1 – a = 25a) or (a = ). The equilibrium strategy for this game is a mixed strategy where each player plays stay with a probability of and swerve with aprobability of . The probability of the socially desirable oute, at least one player will swerve (no crash), is 1 – (a a) or . In other words, if this game is played repeatedly the socially undesirable oute (crash) is expected to occur with a frequency of %.In a client auditor context we apply the following interpretation to the game of chicken. The client may consider misstating their financial statements (for example, overstating earnings). The client’s choice is either to stay (overstate earnings) or swerve (report earnings fairly). The client makes this choice and reports year end earnings. The client’s report is made prior to the audit, but the auditor is unaware of the client’s choice. The auditor faces the choice of performing a normal audit (swerve) or an extensive and more expensive audit (stay). An extensive audit detects overstated earnings, where as a normal audit does not detect overstated earnings. The client ethical issue here is management fraud (deliberate misstatement of the financial statements by the client’s management). The auditor’s ethical issue is performing an audit that provides reasonable assurance of preventing or detecting management fraud. We use management fraud because, unlike employee fraud, it almost always involves material misstatements of financial statements.If the auditor could observe the client’s actions, the auditor’s choice would be trivial. However, we assume that the auditor cannot observe the client’s action choice. Hence, from a game theory perspective the client and auditor are playing simultaneously and this game is interesting, as opposed to trivial, because it is strategic in nature. That is, the auditor’s willingness or unwillingness to play stay must influence the client’s willingness or unwillingness to play stay. Similarly, the client’s willingness or unwillingness to play stay must influence the auditor’s willingness or unwillingness to play stay. This will only be so if the client prefers to overstate earnings。 or more directly stated the client is unethical and willing to opportunistically mit a fraud.A better model, the welfare gameWhile the game of chicken provides intuition for the client’s reporting and the auditor’s effort choices, the game of chicken is inappropriate to model these related client auditor choices at a more detailed level. This is because the client auditor game is not symmetrical. While the client and auditor face the same action choices, they face different payoffs from the action choices and consequently play different strategies.The client’s highest payoff es from an undetected fraud (recall, the client is assumed to benefit from and to be willing to mit a fraud). The client’s lowest payoff es from a detected fraud. The client is indifferent to the auditor’s action when the client reports fairly. The client’s preferred strategy then is to stay when the auditor swerves and swerve when the auditor stays. The client wishes to attempt a fraud only when it will not be detected and report fairly only when the auditor performs an extensive audit.附錄二財(cái)務(wù)報(bào)表審計(jì)：懦夫博弈？摘 要本文運(yùn)用從懦夫博弈中得到的靈感，建立從客