games in Chapter 6 Perfect Information
(right click on the game to download it)
description of the experiment
Game 6.1: Adjustment costs
A game with costly adjustment between two competitors of
different size. Because of its high adjustment costs, the market value of the
large firm is higher from stagnating if the small firm does too. The
capitalized value of the small firm however increases from modernizing
regardless of what the large firm does. Moreover if the small firm modernizes
but the large one stagnates, the small firm gains a significant proportion of
the business that previously belonged to the large firm. Finally we assume
that the small firm is able to react to the plans of the large firm because
it has lower lead times. Thus the large firm must choose between stagnating
and modernizing before the small firm. Notice that this process is modeled as
a game of perfect foresight because, nature does not play a role, and because
the small player knows exactly what the large player has done before making
its own decision.
Game 6.2: Congestion
Three sun bathers sequentially arrive at a beach, which is
a mixture of whom have the same preferences over sand and rock. There is an
abundance of places that differ only marginally in their desirability, the
most desirable rocky spot yields 10 utils for the day, the second most
desirable rocky spot 9 utils and so on. Sand, however, is scarce but common
property. If only one person lies on the sand then her utility is 20, but if
two lie there the utility of each person is only half that. It falls even
further if three crowd on the same patch.
Game 6.3: Market saturation
At the beginning of the game a potential entrant decides whether to enter a whale watching tour boat industry in an isolated vacation resort which is currently served by a single operator. There is a fixed entry cost of $1 million for the new entrant for plant, and constant variable costs. The monopoly rent from this industry is $4 million.
Game 6.4: Allience
This is a game for 5 players, each of whom takes turns to
stop play from progressing further. Regardless of when play stops, the sum of
the payoffs to all players is 15, one player receiving 1, another 2, and so
forth up to 5. Payouts at the terminal nodes are only distinguished by how
the payouts of 1 through 5 are assigned.
There are two players: the firm and the builder. The firm moves first and has two choices. The firm can either offer a contract or not. If no contract is offered, then the game ends. If the firm offers a contract then the builder has to decide whether to accept it or not. If the builder rejects the contract, the game ends. If the builder accepts the contract, then the builder has to decide whether to put a high effort or a low effort.
Game 6.8: Air service
There are two
players that compete in the same industry: Cheetah Air and Eagle Air. Cheetah
Air has two choices: to create a route or not to create a route but does not
know the demand for the route when the decision has to be made. When Eagle
Air is deciding between Entering or not entering the same market he does not
know the demand either but he knows Cheetah Air decision.
Game 6.9: Air service redrawn
Game 6.10: Air service with expected value
Game 6.11: Innovator and venture capitalist
An innovator is seeking funds for a project. Neither the
innovator not the venture capitalist knows if the project has a commercial
value. Innovator has to decide to ignore opportunity or seek funding. Venture
capitalist decides between funding and not funding if he is approached by
Game 6.12: Innovation and venture capitalist redrawn
Game 6.13: Philips and Sony (Demand for CD players)
Philips has a dilemma: to build a factory immediately or Wait. If they build immediately they will not know the buyer’s demand. If they wait for a year the demand will be know but they have a risk of Sony entering the market. However Sony does not observe the demand when they make decision to build or not to build.
Game 6.14: Philips and Sony redrawn