1. Game Theory
Game 8
Option Value

2. Possible Outcomes Enter Alone Both Enter Do Not Enter
Success: = 200
Failure: =
Both Enter
Success: = 100
Failure: =
Do Not Enter
Success: = 50
Failure: =

3. The Game Game of Chicken Firm 2 Enter Wait Firm 1 0 , 0 50 , 25
0 , 0
50 , 25
25 , 50
25 , 25

4. Option Value If commit: If do not commit:
Expected earnings of between 50 and 0
If both enter: expected earnings of 0
If do not commit:
Do not take a chance at a loss
Expected profit: 25

5. Class Results Enter: 28 (80%) Wait: 7 (20%) Enters: success failure
Both (10): 4 6
One (7): 4 3
Neither (0):
8 9

6. Profits Enter Wait Alone Succeed 200 4 Together Succeed 100 8
Fail
EXPECTED PROFIT:
Wait
Succeed 50 4
Fail 0 3
EXPECTED PROFIT:

7. What’s Luck Got to Do With It?
Enter alone, succeed:
Hans
Michael M.
Tanner
Ziyi

8. Bad Luck … (Bad Market Research?)
A-Ja Je-Z
Alex
Alexa
Colin
Courtney
Fan
Isabel
Jamie K.
Jamie W.
Jeff
Luis
Michael F.
Steven
Taylor M.
Taylor P.
Will
Yuda

9. Commitment Under Uncertainty
 Potentially greater profits
Flexibility
 Avoidance of potential losses
Tradeoff
 Depends on actions of others