Fraudulent Accounting and Other Doping Games
Zurich IEER Working Paper No. 175
23 Pages Posted: 7 Feb 2005
Date Written: December 2003
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: Suggested Citation