Quantifying incentive (in)compatibility: A case study from sports

Abstract

For every sports tournament, it is an important requirement to provide contestants with the appropriate incentives to perform. However, incentive compatibility is usually considered an all or nothing (binary) concept in the academic literature, that is, the rules are proved to be either strategy-proof or vulnerable to manipulation. Our paper aims to present a method for quantifying the violation of this theoretical property through the example of the European Qualifiers for the 2022 FIFA World Cup. Even though that competition is known to be incentive incompatible since lower-ranked Nations League group winners are interested in the success of their higher-ranked peers, the extent of the problem has remained unexplored until now. Computer simulations reveal that the threat of tanking can be substantially mitigated by adding a carefully chosen set of draw restrictions, which offers a justifiable and transparent solution to improve fairness. Sports governing bodies are encouraged to take our findings into account.