Racing to the Bottom A Game-Theoretic Model of Safety Investment, Competitive Pressure, and Liability in Frontier AI Development

This document presents a conceptual game-theoretic model that explores the dynamics of safety standards in competitive environments. It examines how competing organizations or individuals may face strong incentives to lower safety standards in order to reduce costs and gain a short-term competitive advantage—a phenomenon widely known as "racing to the bottom." The model illustrates the specific market conditions under which this decline in safety occurs. Furthermore, it explores potential solutions and mechanisms, such as regulatory oversight, financial incentives, and industry-wide cooperation, that can realign incentives and prevent this decline. The insights provided are highly relevant for policymakers, industry leaders, and safety regulators who aim to design robust frameworks that ensure high safety standards without stifling healthy competition.