The Hidden Perils of Affirmative Action: Sabotage in Handicap Contests

Alasdair Brown and Subhasish Chowdhury
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Alasdair Brown: University of East Anglia

No 62, University of East Anglia Applied and Financial Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

Abstract: Contests are ubiquitous in economic and political settings. Contest designers often use tools to make a contest among asymmetric contestants more even, in order to either elicit higher effort levels, or for ethical reasons. Handicapping - in which stronger participants are a priori weakened - is one successful tool that is widely used in sports, promotional tournaments and procurement auctions. In this study we show theoretically that participants may also increase their destructive effort, and sabotage their rivals' performance, when handicapping is employed. We empirically verify this prediction using data on 19,635 U.K. horse-races in 2011 and 2012. Our results suggest that while a level field may be conducive to heightened positive effort in general, in a setting where both handicapping and sabotage (`interference') are present it also lays the ground for greater destruction.

Date: 2014-04
New Economics Papers: this item is included in nep-exp and nep-hrm
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Journal Article: The hidden perils of affirmative action: Sabotage in handicap contests (2017)
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