Deterrence in Rank-Order Tournaments

Phil Curry and Steeve Mongrain

Discussion Papers from Department of Economics, Simon Fraser University

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.

Keywords: Enforcement; Cheating; Tournament (search for similar items in EconPapers)
JEL-codes: J41 K42 (search for similar items in EconPapers)
Pages: 30
Date: 2007-05
New Economics Papers: this item is included in nep-law
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Journal Article: Deterrence in Rank-Order Tournaments (2009)
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