Moral Hazard and the Newton Case

I am not fully versed in the NCAA rulebook, but I believe this much: either Cam Newton will face some sort of penalty, or the NCAA rules will be changed so that he would have if the new rules had been in place. It all comes down to what economists call moral hazard. Wikipedia, give us a quick definition please.

Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk.

It would be unfair if Cam truly didn't know anything about his father trying to shake down Mississippi State and still got punished. However, it sets a bad precedent and creates moral hazard. It basically would be a signal that parents can go ahead and ask boosters for money as much as they want as long as their athlete children have plausible deniability.

If it somehow comes to light that an Auburn booster did funnel money to Cecil Newton and Cam doesn't get punished, that's even worse. Then the signal goes out that parents can get paid for their children's commitments if, again, their athlete children have plausible deniability. At that point, you might as well toss out all rules about extra benefits.

I've seen some responses to this argument I've laid out here. They largely boil down to this: if Cam didn't know and gets punished, wouldn't then a player get in trouble if some family member (or friend, or random person, etc.) asks for money and he doesn't know it?

Short answer: no.

Long answer: no, you idiot.

The NCAA isn't run by mindless automatons, despite what it may seem at times. There is a huge difference between a parent that a player lived with and has close ties to (like Cecil Newton for Cam) and some random person.

You would generally figure that a family member or friend would intentionally ask for money in order to get the player in trouble unless they had a vendetta against the player, and that vendetta would come out in the investigation. As far as a random person? It's a random person. If there are no ties between that random person and the athlete, that's pretty easy to prove.

The whole risk of a parent asking for money is that the child might get declared ineligible. If nothing happens or gets changed as a result of this Newton episode, then parents become insulated from that risk. The NCAA will have created moral hazard, and it's not the kind it ever wants to endorse.

BONUS MATERIAL: ABOUT THAT TEXT MESSAGE

I've seen a lot of discussion around about the likelihood of whether Bill Bell can get back that currently lost text message from Kenny Rogers. Being an IT guy, I think I can shed some light on this.

One possibility is that the carrier is trying to get the text message off of the phone's memory itself. We don't know the nature of the water damage, so it could be possible to retrieve it that way. If it was fresh water, the chances aren't bad unless the battery somehow fried the whole board. If it was salt water (Bell does live in Destin) the chances are much worse. Salt water corrodes electronics very quickly.

The other option is trying to get the text message from the carrier's electronic records. Here's where it gets a little more complex.

Carriers have databases for text messages because SMS is not a peer-to-peer technology. When you send a text message, it goes to the carrier's database. From there, it gets forwarded to the recipient. I don't know how long carriers keep these records, but from what I can tell, it's not a very long time.

Now, any self-respecting large enterprise has daily backups. They're probably managed by a third party that stores those backups off site. The reason long-term backups are generally not stored at companies' production data centers is because of the risk of a disaster (like a fire) that destroys the building. You'd be SOL then because both your production environment and your backups are gone in a single stroke. 

Even though carriers don't keep text messages around very long, I imagine they stay around for at least a day. In that case, every text message would be captured in one of those daily backups.

If you accidentally delete a text message and you ask your carrier to get it for you, they'll probably just tell you they don't have it anymore. It's not worth the time and money from them to retrieve it from their backups. However, if it's needed as evidence in a court case (like Tiger Woods's divorce, perhaps) or the FBI asks for it, then the carrier would probably go through the time and trouble to get it.

To make a long story short, it's entirely possible that this text message could turn up. I wouldn't put it at 100% solid chances because I've never worked at a carrier to know how things go on the inside. Given what I do know, I would imagine that it will turn up in the near future.