
We develop a model of risky information transmission between a higher and a lower-ability agent, which closely resembles academic cheating behavior. Assuming no synergy effects between agents or correlation of outputs, we derive a substitution and a strategic effect, both of which dictate the behavior of agents when information transmission is feasible. We show that the high-ability agent may find it strategically useful to moderate her effort in order to limit the supply of information and curb her risk. We also find that the use of a relative compensation scheme may cause cheating activity to increase when the coefficient of relative incentives is not sufficiently high. Even when relative incentives are powerful enough to mitigate cheating, this seriously distorts the incentives, causing high-ability agents to further cut down on effort. We conclude that the performance of the group is higher when similar ability agents are matched, and that the only cost-free way to deter cheating is to match agents of similar abilities together, since the risk of transmitting information will offset its benefit. We also extend the model to include the case where the higher-ability agent can choose the level of her cheating supply.