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Deterrence in Rank-Order Tournaments

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Abstract

In a tournament, competitors may engage in undesirable activities, or 'cheating', in order to gain an advantage. Examples of such activities include the taking of steroids, plagiarism, and 'creative accounting'. This paper considers the problem of deterrence of these activities and finds that there exist special considerations that are not present in a traditional model of law enforcement. For example, an agent's returns to cheating depend on the cheating decisions of others, and so there may exist multiple equilibria. The problem of multiple equilibria can be reduced when the first-place prize is awarded to the person that performed best without cheating. Moreover, we show that re-awarding prizes reduces the amount of monitoring required to ensure compliance. We also demonstrate that monitoring costs can be further reduced by monitoring the winner of the tournament more than the loser, and by manipulating prizes, including through the introduction of prizes for non-winners.

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Paper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number dp07-04.

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Length: 30
Date of creation: May 2007
Date of revision:
Handle: RePEc:sfu:sfudps:dp07-04

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Postal: Working Paper Coordinator, Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
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Keywords: Enforcement; Cheating; Tournament;

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References

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  1. Ian Preston, 2003. "Cheating in Contests," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 19(4), pages 612-624, Winter.
  2. Rasmusen, Eric, 1996. "Stigma and Self-Fulfilling Expectations of Criminality," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 39(2), pages 519-43, October.
  3. Bognanno, Michael L, 2001. "Corporate Tournaments," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 19(2), pages 290-315, April.
  4. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, Elsevier, vol. 21(2), pages 467-481, June.
  5. Kenneth Burdett & Ricardo Lagos & Randall Wright, 2002. "Crime, Inequality, and Unemployment, Second Version," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 03-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
  6. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1993. "Why Is Rent-Seeking So Costly to Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 83(2), pages 409-14, May.
  7. Kong-Pin Chen, 2003. "Sabotage in Promotion Tournaments," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 19(1), pages 119-140, April.
  8. Christine Harbring & Bernd Irlenbusch & Matthias Kräkel & Reinhard Selten, 2004. "Sabotage in Asymmetric Contests – An Experimental Analysis," Bonn Econ Discussion Papers, University of Bonn, Germany bgse12_2004, University of Bonn, Germany.
  9. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
  10. Sah, Raaj K, 1991. "Social Osmosis and Patterns of Crime," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(6), pages 1272-95, December.
  11. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation Of The Prevalence And Predictors Of Teacher Cheating," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 118(3), pages 843-877, August.
  12. Konrad, Kai A, 2000. "Sabotage in Rent-Seeking Contests," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 16(1), pages 155-65, April.
  13. Nirvikar Singh & Donald Wittman, 2001. "Contests where there is variation in the marginal productivity of effort," Economic Theory, Springer, Springer, vol. 18(3), pages 711-744.
  14. Berentsen, Aleksander, 2002. "The Economics of doping," MPRA Paper 37322, University Library of Munich, Germany.
  15. Gil S. Epstein & Carsten Hefeker, 2003. "Lobbying contests with alternative instruments," Economics of Governance, Springer, Springer, vol. 4(1), pages 81-89, 04.
  16. Konrad, Kai A., 2005. "Tournaments and Multiple Productive Inputs: The Case of Performance Enhancing Drugs," IZA Discussion Papers 1844, Institute for the Study of Labor (IZA).
  17. Wolfgang Maennig, 2002. "On the Economics of Doping and Corruption in International Sports," Journal of Sports Economics, , , vol. 3(1), pages 61-89, February.
  18. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 37(1), pages 7-63, March.
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Cited by:
  1. Gill, David & Prowse, Victoria L. & Vlassopoulos, Michael, 2012. "Cheating in the Workplace: An Experimental Study of the Impact of Bonuses and Productivity," IZA Discussion Papers 6725, Institute for the Study of Labor (IZA).
  2. Daniel Mueller, 2013. "The Doping Threshold in Sport Contests," Working papers, Faculty of Business and Economics - University of Basel 2013/05, Faculty of Business and Economics - University of Basel.
  3. Nicolas Eber, 2011. "Fair play in contests," Journal of Economics, Springer, Springer, vol. 103(3), pages 253-270, July.
  4. Subhasish M. Chowdhury & Oliver Gurtler, 2013. "Sabotage in Contests: A Survey," University of East Anglia Applied and Financial Economics Working Paper Series, School of Economics, University of East Anglia, Norwich, UK. 051, School of Economics, University of East Anglia, Norwich, UK..

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