Sabotage in team contests

Serhat Doğan, Kerim Keskin and Çağrı Sağlam
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Serhat Doğan: Bilkent University

Public Choice, 2019, vol. 180, issue 3, No 9, 383-405

Abstract: Abstract In the contest literature, sabotage is defined as a deliberate and costly activity that damages the opponent’s likelihood of winning the contest. Most of the existing results suggest that, anticipating a possible sabotage, contestants would be discouraged from exerting high efforts. In this paper we investigate the act of sabotage in a team contest wherein team members exert costly efforts as a contribution to their team’s aggregate effort, which in turn determines the contest’s outcome. For the baseline model with no sabotage, there exists a corner equilibrium implying a free-rider problem in each team. As for the model with sabotage, our characterization of Nash equilibrium reveals two important results: (i) a unique interior equilibrium exists so that the free-rider problem no longer is a concern and (ii) the discouragement effect of sabotage vanishes for some players. On top of those conclusions, we investigate the team owner’s problems of prize allocation and team formation with the objective being to maximize his team’s winning probability.

Keywords: Team contests; Sabotage; Tullock contests; Free riding; Discouragement effect; Encouragement effect (search for similar items in EconPapers)
JEL-codes: C72 D74 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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DOI: 10.1007/s11127-019-00643-1

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