List of games in Chapter 10 Mixed Strategies

Using Comlabgames


Game title

 (right click on the game to download it)

Short description of the experiment

Game 10.1: Matching pennies in the strategic form

There are two players: Player 1, a column player and Player 2, a row player. Each player can choose between two choices: heads and tails. If both choose tails, or heads then Player 2 receives 1 and Player 1 receives -1; otherwise Player 2 receives -1 and Player 1, 1.

Game 10.2: Parking meter in the strategic form

A shopper considers whether or not to feed the meter. At $1.00 an hour she requires 4 eight quarters to complete her 2 hour excursion, and if she does not pay, and the patrol checks her meter within that hour, a fine of $10.00 is levied. The patrol is rewarded on its success in discovering parking violations. An alternative use of the patrol's time would be to spend less time checking meters and more time in the air conditioned patrol car.

Game 10.3: Taxation in the strategic form

There are two players in this game: a taxpayer (the business) and a collection agency. A business recognizes that if it honestly reports is income over the tax period, it will be liable for $4 million. There are, however, two alternatives to truthful reporting. The business pays no tax if it fraudulently claims to have made no net income, and is not audited. If caught, it pays a penalty of 200 percent on its tax burden, and must pay $12 million in total. The second option is to make a plausible error that reduces but not eliminate the tax burden. This can be more easily detected by the collection agency but is only penalized by 100 percent of the tax burden. The accounting irregularity reduces taxes by $2 million. Thus the firm pays $6 million in total if audited or if its accounting arithmetic is checked. The objective of the collection agency is to maximize net revenue within its legislative charter. Checking for accounting regularities costs the collection agency $1 million, but conducting a full audit twice as expensive, $2 million.

10.4: Ware case in the strategic form

There are two players in this game: Ware who10 years ago received a patent for Dentosite that has captured 60 percent share in the market and National was the largest supplier of material for dental prosthetics before Dentosite. The new material is found. If the technique is feasible then Ware would have just as good chance as National of being the first to prove it. If Ware develops it first they could extend the patent protection to these techniques and prevent any competitors. There are two choices that Ware and National face: to develop (in) or not to develop the product (out).

10.5: Broadband in the strategic form

When firms over invest in a new market, industry watchers are often critical of the naive expectation held by each firm in not properly anticipating the actions of its rivals. The recent collapse of the broadband cable laying market is just a recent illustration of this phenomenon. However the following analysis castes doubt on the hypothesis that such problems would not arise if the managers involved in these debacles were replaced by more intelligent and strategically savvy players. In the broadband game we assume that if only firm enters, then the value of the firm will rise by $10 billion, but if two firms enter both will both suffer losses of $1billion. I both of the firms stay out they receive $0.

10.6: Entry threat in the extensive form

Accordingly, suppose an incumbent firm currently has a monopoly in a market, and at the initial node of the game, a rival chooses between end the monopoly and enter its market, or stay out. After the rival makes its decision, the incumbent firm chooses between producing less output to accommodate both firms and thus maintain the market price, much versus to produce the same output as before causing the price to fall sharply to prevent inventory accumulation. The extensive form of this entry game is depicted in Figure 8.7. Solving the game using backwards induction, the first rule of strategic play implies that the rival should enter and the incumbent should acquiesce.

10.7: Entry threat in the strategic form