This program sets up a multi-person game in which each
person chooses whether or not to enter a market or other activity in which the earnings
for each entrant depend on the number of others that enter.
The payoff for not entering is constant and independent of
If the number of participants is
large, the equilibrium will be characterized by equal expected payoffs for
entry and non-entry, which results in over-entry.
The resulting congestion can be controlled by imposing an entry fee that forces entrants to pay the external costs imposed on others. The
entry fee or toll is set by the experimenter. Alternatively, you can stop play and let
the class vote on a fee for the next round
(with fee revenues to be divided equally).
Students are surprised by
the observation that a tax can be beneficial in this context.
Copyright 2009, Charles Holt, Please report problems and suggestions:
| || || || || ||
The payoff setup
is flexible and permits one to structure a game with congestion and/or threshold
In particular, the Development Game option permits positive externalities from entry, as when
a critical mass is reached in economic development.
Vecon Lab - December 22, 2014