  It is well known that a game equilibrium can be far from efficient or fair,
due to the misalignment between individual and social objectives. The focus of
this paper is to design a new mechanism framework that induces an efficient and
fair equilibrium in a general class of games. To achieve this goal, we propose
a taxation framework, which first imposes a tax on each player based on the
perceived payoff (income), and then redistributes the collected tax to other
players properly. By turning the tax rate, this framework spans the continuum
space between strategic interactions (of selfish players) and altruistic
interactions (of unselfish players), hence provides rich modeling
possibilities. The key challenge in the design of this framework is the proper
taxing rule (i.e., the tax exemption and tax rate) that induces the desired
equilibrium in a wide range of games. First, we propose a flat tax rate (i.e.,
a single tax rate for all players), which is necessary and sufficient for
achieving an efficient equilibrium in any static strategic game with common
knowledge. Then, we provide several tax exemption rules that achieve some
typical fairness criterions (such as the Max-min fairness) at the equilibrium.
We further illustrate the implementation of the framework in the game of
Prisoners' Dilemma.
