The economics of doping
This paper considers a strategic game in which two players, with unequal prospects of winning the game, decide simultaneously and secretly to use performance-enhancing drugs before they compete. In the mixed strategy equilibrium, the favorite player is more likely to take these drugs than is the underdog, yet, for some parameter values, he is less likely to win the game with doping opportunities than without. The paper then analyzes the anti-doping regulations adopted by the International Olympic Committee, comparing its rules with a ranking-based sanction scheme. Two results emerge from this comparison: First, while IOC regulations cannot satisfy participation and incentive compatibility constraints and implement the no-doping equilibrium in all circumstances, a more effective ranking-based sanction scheme with these properties exists. Second, ranking-based punishment schemes are less costly to implement than are IOC regulations because fewer tests are needed to attain the no-doping equilibrium.
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