Fraudulent Accounting and Other Doping Games

Zurich IEER Working Paper No. 175

23 Pages Posted: 7 Feb 2005

See all articles by Aleksander Berentsen

Aleksander Berentsen

University of Basel - Faculty of Business and Economics; CESifo (Center for Economic Studies and Ifo Institute)

Yvan Lengwiler

University of Basel - Faculty of Business and Economics (WWZ)

Date Written: December 2003

Abstract

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 both applications within the same model. We allow for heterogenous populations, such as highly talented versus more mediocre athletes, or high quality managers versus less able colleagues. Interestingly, for some parameters, the replicator dynamics is characterized by cycles. Thus, we may see cycles of doping and clean sport, and cycles of fraudulent and honest accounting. Moreover, in some cases, high ability players are more likely to commit fraud than low ability types.

Keywords: replicator dynamics, cheating, doping, fraudulent accounting

JEL Classification: C7, M4

Suggested Citation

Berentsen, Aleksander and Lengwiler, Yvan, Fraudulent Accounting and Other Doping Games (December 2003). Zurich IEER Working Paper No. 175. Available at SSRN: https://ssrn.com/abstract=495384 or http://dx.doi.org/10.2139/ssrn.495384

Aleksander Berentsen (Contact Author)

University of Basel - Faculty of Business and Economics ( email )

Petersplatz 1
Basel, 4001
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Yvan Lengwiler

University of Basel - Faculty of Business and Economics (WWZ) ( email )

Peter Merian-Weg 6
PO Box
Basel, CH-4002
Switzerland
+41 61 267 3369 (Phone)

HOME PAGE: http://wwz.unibas.ch/lengwiler

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