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Fraudulent Accounting and Other Doping Games

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  • Aleksander Berentsen
  • Yvan Lengwiler

Abstract

From a game theoretic point of view, fraudulent accounting to embellish the financial status of a firm and the use of drugs to enhance performance in sports are very similar. We study the replicator dynamics of both applications within the same model. We allow for heterogenous populations, such as highly talented versus more mediocre athletes, or high quality managers versus less able colleagues. Interestingly, for some parameters, the replicator dynamics is characterized by cycles. Thus, we may see cycles of doping and clean sport, and cycles of fraudulent and honest accounting. Moreover, in some cases, high ability players are more likely to commit fraud than low ability types.

Suggested Citation

  • Aleksander Berentsen & Yvan Lengwiler, "undated". "Fraudulent Accounting and Other Doping Games," IEW - Working Papers 175, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:175
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    3. Berentsen, Aleksander, 2002. "The economics of doping," European Journal of Political Economy, Elsevier, vol. 18(1), pages 109-127, March.
    4. Aleksander Berentsen & Esther Br�gger & Simon L�rtscher, "undated". "On Cheating and Whistle-Blowing," IEW - Working Papers 153, Institute for Empirical Research in Economics - University of Zurich.
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    Cited by:

    1. Müller, Daniel, 2013. "The Doping Threshold in Sport Contests," Working papers 2013/05, Faculty of Business and Economics - University of Basel.
    2. Kräkel, Matthias, 2005. "Doping in Contest-Like Situations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 46, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Kräkel, Matthias, 2006. "Doping and Cheating in Contest-Like Situations," IZA Discussion Papers 2059, Institute for the Study of Labor (IZA).
    4. Haß, Lars Helge & Müller, Maximilian A. & Vergauwe, Skrålan, 2015. "Tournament incentives and corporate fraud," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 251-267.
    5. Volker Robeck, 2014. "Professional Cycling and the Fight against Doping," MAGKS Papers on Economics 201456, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Nicolas Eber, 2012. "Doping and Anti-doping Measures," Chapters,in: International Handbook on the Economics of Mega Sporting Events, chapter 12 Edward Elgar Publishing.
    7. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    8. Bruno Frey, 2005. "‘‘Just forget it.’’ Memory distortions as bounded rationality," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 4(1), pages 13-25, June.
    9. Aleksander Berentsen & Esther Bruegger & Simon Loertscher, "undated". "Heterogeneity, Local Information, and Global Interaction," IEW - Working Papers 182, Institute for Empirical Research in Economics - University of Zurich.
    10. Jiong Gong & R. Preston McAfee & Michael A. Williams, 2016. "Fraud Cycles," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(3), pages 544-572, September.
    11. Sebastian Bervoets & Bruno Decreuse & Mathieu Faure, 2014. "A Renewed Analysis of Cheating in Contests: Theory and Evidence from Recovery Doping," AMSE Working Papers 1441, Aix-Marseille School of Economics, Marseille, France, revised Jun 2015.
    12. Alexander Dilger & Bernd Frick & Frank Tolsdorf, 2007. "Are Athletes Doped? Some Theoretical Arguments And Empirical Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 604-615, October.
    13. Buechel, Berno & Emrich, Eike & Pohlkamp, Stefanie, 2013. "Nobody's innocent: the role of customers in the doping dilemma," MPRA Paper 44627, University Library of Munich, Germany.
    14. Nicolas Eber, 2011. "Fair play in contests," Journal of Economics, Springer, vol. 103(3), pages 253-270, July.
    15. Krakel, Matthias, 2007. "Doping and cheating in contest-like situations," European Journal of Political Economy, Elsevier, vol. 23(4), pages 988-1006, December.

    More about this item

    Keywords

    replicator dynamics; cheating; doping; fraudulent accounting;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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