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: 26 (68%) Wait: 12 (32%) Enters: success failure
Both (9): 5 4
One (8): 3 5
Neither (2):
10 9

6. Profits Enter Wait Alone Succeed 200 3 Together Succeed 100 10
Fail
EXPECTED PROFIT:
Wait
Succeed 50 7
Fail 0 5
EXPECTED PROFIT:

7. What’s Luck Got to Do With It?
Enter alone, succeed:
Connor
Sonny
Justin V.

8. Bad Luck … (Bad Market Research?)
A-M N-Z
Cameron C.
Christian C.
Hannah F.
Ian M.
Joe D.
Martin M.
Noah S.
Nora M.
Peter J.
Ryan F.
Shrey P.
Tony J.
Tyler D.

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