Fraudulent Accounting and Other Doping Games

Aleksander Berentsen, Yvan Lengwiler
2004 Journal of Institutional and Theoretical Economics  
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 such games. We allow for heterogeneous populations, such as highly talented versus more mediocre athletes, or high-quality managers versus less able colleagues. For some parameters we find cyclical dynamics, so we may see waves of doping and clean sport, and cycles of fraudulent and
more » ... fraudulent and honest accounting. Moreover, in some cases, high-ability players are more likely to commit fraud than low-ability ones. (JEL: C 7, M 4) * We thank the anonymous referees for diligent reviews. 1 The classic reference on rank-order tournaments is LAZEAR AND ROSEN [1981] . The literature that followed this seminal contribution typically does not address issues of dynamics, which are at the center of the present paper.
doi:10.1628/0932456041960579 fatcat:bsfg42j7wnfvnj77qsxjswjaxe