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Abstract
Perverse incentives are ubiquitous in different economic settings. In sports, they often take the form of temptation to deliberately lose matches (the phenomenon known as tanking or sandbagging). In practice, there were even such pathological situations as when a soccer team intentionally scored an own goal. We show how and when the temptation is generated by the current pair matching method, the one applied after the first phase of many popular tournaments, including the most prestigious soccer championships. If the organizers of important sporting contests do not introduce any organizational innovations, they risk serious match-fixing scandals. We introduce an alternative procedure and show that its practical implementation could radically mitigate the risk. We perform a comparative analysis of the methods. We analyze the format “Winners and Runners-up Advancing from Two Adjacent Groups”, particularly its FIFA World Cup variant. In order to quantify the benefits of switching from the current method to the proposed one, we refer to simulation results. The expected decrease in temptation probability is about 83% and could be even about 90% if we additionally implement the suggested scheduling innovation.
Highlights
The designers of economic systems should always analyze if the incentives they consider implementing can, under some special circumstances, act contrary to their intentions
In order to quantify the benefits of switching from the current method to the proposed one, we refer to simulation results
We could still think of different reasonable factors which should be reflected in the utility function; for example, the fact that some competitors in the last group matches are highly interested in saving energy for the match or minimizing the risk of injuries
Summary
The designers of economic systems should always analyze if the incentives they consider implementing can, under some special circumstances, act contrary to their intentions. Examples of perverse incentives are known in many different economic contexts. They are a type of the more general phenomenon of negative unintended consequences. Perverse incentives are relatively common in sports tournaments as documented, e.g., by Kendall and Lenten (2017). They negatively affect an event’s attractiveness and reduce demand. Perverse incentives often lead to match-fixing, which can take the form of deliberately losing. The phenomenon (known by different names as e.g., throwing matches, tanking, or sandbagging) has been studied in the literature, for instance: Csató (2019a); Csató (2019b); Kräkel (2014)
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