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WHY ZERO TOLERANCE OF MISCONDUCT IS UNDESIRABLE IN CONTESTS
Author(s) -
Gilpatric Scott M.,
Reiser Cristina M.
Publication year - 2017
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12410
Subject(s) - misconduct , temptation , contest , cheating , competition (biology) , order (exchange) , economics , psychology , social psychology , law , political science , ecology , finance , biology
Competition can foster misconduct in any circumstance where the organizer of a contest cannot perfectly monitor contestants' actions or when doing so is prohibitively costly. Although misconduct comprises all actions that are contrary to the interest of the organizer, it is not necessarily the case that it is optimal to prohibit all such behavior. In this paper, we determine the equilibrium level of misconduct chosen by players in a symmetric rank‐order tournament between two competitors in which the organizer tolerates some level of misconduct. In addition to showing that zero tolerance may not minimize the level of misconduct in equilibrium, we show that there exists a range of tolerated misconduct where a symmetric mixed strategy equilibrium exists with players cheating (i.e., misconduct above the tolerated level) with some probability. When the gain from misconduct is uncertain and unknown the contest organizer faces a tradeoff: tolerating more misconduct will reduce such behavior when the state of temptation is high, but increase it when temptation is low. ( JEL J33, K42)