The Threat of Sabotage and Collusion in Tournaments

Abstract

This study explores how the threat of sabotage efforts influences agents' decisions in repeated tournaments, where the options include collusion and sabotage. Additionally, we examined the desirability of asymmetry between agents in such tournaments. We considered the case in which exerting a sabotage effort is a Nash equilibrium in a stage game. However, if the tournament continues over the long term, two types of collusion can occur: high-effort and low-effort. In high-effort collusion, both agents exert productive effort until one deviates to sabotage effort. By contrast, in low-effort collusion, agents exert no effort at each stage. This study identified the conditions under which high-effort collusion is more likely to occur. Our findings indicate that a homogeneous tournament design can effectively mitigate sabotage efforts and low-effort collusions.

Keywords: Tournaments, Collusion, Heterogeneity, Repeated game, Sabotage