In: Economics
Problem XI: Two athletes simultaneously decide whether to use performance enhancing drugs or stay clean. If they both stay clean, they each earn 50. If they both use, they each earn 45 (the competitive balance is maintained, but there are some health costs associated with using these drugs). If one uses while the other one stays clean, the one who uses earns 95, while the clean one earns zero. Assume these athletes are engaged in repeated interactions and they play a GRIM strategy (they want to stay clean, but if the one athlete starts using, the other one will be forced to also use and once they start using they never go back). Furthermore, assume there is a 15% probability each round that the athletes will suer a career ending injury and a 10% probability that use of drugs will be detected and will result in being banned from the sport. There is no discounting of future payos.
a) will these athletes nd it optimal to use drugs or stay clean?
b) what if the probability of detecting drug usage increases from 10% to 90%?
c) can you think of something else to be implemented or changed in the game that will 3 incentivize the athletes not to use drugs?
Answer XI (a) : The athletes will find is easier to use drugs and would forego their want to stay clean. This is because as per the given statement, there is a 15% probability and 10% chance that these players would be caught and once caught, they would be banned for life. However, the mechanisms to detect any such drug intake is very non-sophisticated and unorganized. There is very little possibility that the players would want to continue their career at the cost of losing a match for the sake of a clean career and for a good reputation. Therefore, taking all these factors in to account, the players would want to use the drugs and would forego to stay clean.
Answer XI (b) : If the probability of detecting the drug usage increases from 10% to 90% , it means that there is almost a sure possibility that they would get caught if they intake the drugs. Once caught, they would be banned for life, and there is no reprise possible in the future. We must note that, every player wants a clear career, which would give him a good reputation and fame. Each player would want to win a game at their own capabilities. All these factors and more importantly the 90% factor of getting caught would force the players to stay clean and to not use the drugs.
Answer XI (c) : The Associations should ensure that stricter norms and regulations should be imposed on the players to see that the players never would want to engage in to the foul practices of drug intake. Moreover, the associations should encourage the players to stay clean throughout their career. There should be sessions organized where the players are involved and informed about the ill effects of drug intake on their health and more importantly on their career. There must be a comprehensive drive of the proper knowledge imparting to the players from the grass root level to ensure that the players are never enticed to such thoughts right from their childhood. More stricter and fairer norms and regulations can also help us prevent the use of drugs in sports.