List of
games in Chapter 12 Incomplete Information Using Comlabgames |
|
Game
title (right click on the game to download it) |
Short
description of the experiment |
12.1: Armageddon in extensive form |
The northern
hemisphere is inhospitable for large mammals, because of radioactive deposits
from previous nuclear conflicts, atmospheric pollution, debilitating viral
diseases, and low fertility rates. The bulk of the world's human population of 400 million live in |
Illegal trade is
big business. The stakes, and the excitement, are high for those playing on
both sides of the law. The following example show why random behavior is
inherent part of drug traffic and also of law enforcement authorities'
attempts to curtail it. In its war on drugs, the DEA seeks to imprison those
who profit most from the drug trade, partly because it directly reduces the
supply of drugs, and also because it reduces the incentives of those people
who specialize in the trade to enter it in the first place. An important tool
of the DEA is to bribe small operators into betraying larger dealers. At the
initial node the dealer chooses between proposing a job to his drug ring boss,
or first approaching the DEA about the possibility
of a sting that could lead to his boss's arrest. If the dealer chooses the
latter, one response of the DEA is to arrest and convict the dealer on
relatively minor charges. Another is to order a sting in the hope of ensuring
the boss. Thus when the boss is approached by the dealer, he understands that
the plan to enter a new market might be genuine or a ruse. |
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Producers have the opportunity to
compromise the versatility, strength and integrity of their products by using
cheaper materials and tolerating poorer workmanship. The advantage of this
strategy is that costs are reduced, the disadvantage
is that consumers might shun the product, thus reducing its demand. Retailers
play a role in the marketing process, preferring to sell brands that
consumers are happy with. Because retailers play a monitoring role, producers
also benefit from the promotion of their produce through the amount of shelf
space and store advertising. In this game the producer chooses between
manufacturing a defective or a flawless item, which is then delivered to a
retailer. The retailer inspects its quality and decides whether to market the
item or not. If the item is returned to the producer as defective, the
producer incurs a loss. If the item is marketed by the retailer the producer
gains regardless of whether the item sells or not, but would much prefer a
sale. |
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When an
entrepreneur or an innovator approaches a partner, there is often a question
about how much each potential partner knows about the market opportunities.
In this game entrepreneur knows if the opportunity exists or not when he
invites a potential partner. The potential partners knows
the probability weights for the possible opportunity when he is approached by
the enterprenour. |
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12.8: Starting a new business, reduced form in the extensive form |
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The problem of
getting truthful professional advice is illustrated by the stereotypical
experience that car and house owners face when dealing with tradesmen and
mechanics. Suppose the owner detects a noise that never occurred before and occurs
intermittently. Past experience with previous vehicles and those of her
friends suggests that there is an even chance that this signals a severe
problem that will grow worse if remedial action is not taken, versus a minor
problem that can be ignored with any repercosion If the problem is
sever the car will break down and cost $2,000, in which case the mechanic has
20 percent chance of getting the job. If he does not get the job, he will be
otherwise occupied with jobs from other clients. Her first choice is whether
to visit the mechanic, a visit that would cost $200 for his diagnosis. For
this price the mechanic can indeed tell what the nature of the problem is and
how to fix it. At this point the car owner decides whether to have the car
repaired or not. |
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When a country is
planning to invade another, the tactical advantage of surprise partly
compensates for the disadvantages confronting foreign troops seeking to
overwhelm an army defending its own land. Consequently the defending force
has a great incentive to neutralize the surprise element by infiltrating the
intelligence network of the invaders, and communicating the invasion plans to
the defenders. In this example the In the game
without a spy, the payoffs and the game structure is the same (i.e. neither |
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Often companies do
not know precisely how much competition they will face before launching a new
product. Consider two rival firms are competing with each other to discover
and introduce a new product. Both players: Thomson and Smith have two
strategies to advertise product or to charge low price. When they are making
a decision they do not know if both developed the product or just by himself. |
|
12.18: Product development race with an industry newsletter in the extensive form |
This game has only
one difference from the previous product development race: a newsletter is
produced to keep firms abreast of the latest developments and it announces who
developed the product before Thomson and Smith decided between advertising and
low price. This information changes the game to be a prisoner dilemma game. |
12.19: Product development race with an industry newsletter in the strategic form |
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One problem health
insurance providers face is fraudulent behavior by
doctors who prescribe treatment for healthy clients. When a doctor inspects a
client she knows if the client is sick or healthy. She prescribes a treatment
or does not recommend it. Client does not know if he is sick or not and he has
a choice to take the treatment, seeks another opinion or ignore it. |
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12.22: Medical malpractice with full information in the extensive form |