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Sabotage in team contests

Authors
  • Doğan, Serhat1
  • Keskin, Kerim2
  • Sağlam, Çağrı1
  • 1 Bilkent University, Department of Economics, Ankara, 06800, Turkey , Ankara (Turkey)
  • 2 Kadir Has University, Department of Economics, Istanbul, 34083, Turkey , Istanbul (Turkey)
Type
Published Article
Journal
Public Choice
Publisher
Springer US
Publication Date
Feb 01, 2019
Volume
180
Issue
3-4
Pages
383–405
Identifiers
DOI: 10.1007/s11127-019-00643-1
Source
Springer Nature
Keywords
License
Yellow

Abstract

In the contest literature, sabotage is defined as a deliberate and costly activity that damages the opponent’s likelihood of winning the contest. Most of the existing results suggest that, anticipating a possible sabotage, contestants would be discouraged from exerting high efforts. In this paper we investigate the act of sabotage in a team contest wherein team members exert costly efforts as a contribution to their team’s aggregate effort, which in turn determines the contest’s outcome. For the baseline model with no sabotage, there exists a corner equilibrium implying a free-rider problem in each team. As for the model with sabotage, our characterization of Nash equilibrium reveals two important results: (i) a unique interior equilibrium exists so that the free-rider problem no longer is a concern and (ii) the discouragement effect of sabotage vanishes for some players. On top of those conclusions, we investigate the team owner’s problems of prize allocation and team formation with the objective being to maximize his team’s winning probability.

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