NCAA Recruitment Prisoner's Dilemma

CA governor Gavin Newsom recently signed the Fair Pay to Play Act, which will allow collegiate athletes in CA to maintain athletic eligibility while receiving endorsements. This comes after a basketball season in which Duke sensation Zion Williamson generated massive uncompensated value. The NCAA places significant restrictions on player compensation. Some defend this practice as maintaining the student-athlete's integrity, while others are uncomfortable with the athletes foregoing economic rights. It is uncertain how this bill will affect college sports, but there should be more discussion about the other big issue regarding athlete compensation: the prisoner's dilemma in which many colleges have been caught offering illegal incentives to top prospects.

Because schools cannot negotiate a salary with prospects, there is an incentive to attract top high school athletes through under-the-table benefits. Some of the worst examples include coaches hiring escorts for underage prospects and colleges allowing companies like Adidas to pay families to pressure their kids towards Adidas-sponsored teams. Schools recognize a treasure trove to be found in recruiting a superstar athlete. We can model this issue with two schools competing to recruit a unique 5-star athlete to be their centerpiece player, otherwise their best star will be the next best player among the 3-star athletes. In this model, the 5-star player must pick one of the schools. The relevant payoffs involve the expected value of the program's centerpiece player, as well as the costs incurred from bribery (including legal action), which are assumed to be lower than the benefit of having a 5-star player over any other player (less than 1-star).

If neither school offers the player illegal benefits, it will be a toss-up between the schools, with no costs of bribery. The expected payoff will be 4-stars for each school to recognize the toss-up between a 5-star or a 3-star recruit. If one school alone bribes the star, they will have a 5-star player but incur bribery costs while the other school will be left with a 3-star player and no further costs. Lastly, if both teams bribe the athlete, another toss-up will occur, so the expected value for both will be 4-stars minus the costs of bribery. The dominant strategy here is to bribe the athlete, yet the expected payoff for both schools would be higher if neither did so. While legislation is addressing the player's right to their likeness, perhaps it could be used to more robustly police college recruitment. Action to address this prisoner's dilemma could reduce the ills of bribery costs, unfair competition, and exploitation.