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Treasure game

Listed author(s):
  • Matros, Alexander
  • Smirnov, Vladimir

A prize is located at an unknown point on an island. In every period, each of n players searches part of the previously unsearched portion of the island. If a player finds the prize alone he wins it and the game ends. Players have a per-period discount factor and a search cost proportional to area searched. Superior symmetric Markov perfect equilibria are characterized. Equilibria for n ≥ 2 can exhibit two types of inefficiency: a tragedy of the commons (for small islands) and free riding (for large islands). For n ≥ 3, equilibrium properties are non-monotonic: players may be better off searching larger islands. The model is very general: applications include R&D races, team production, and extraction of exhaustible resources.

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File URL: http://econ-wpseries.com/2011/201110-02.pdf
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Paper provided by University of Sydney, School of Economics in its series Working Papers with number 2011-10.

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Handle: RePEc:syd:wpaper:2123/7867
Contact details of provider: Postal:
Sydney, NSW 2006

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Fax: 61 +2 9351 4341
Web page: http://sydney.edu.au/arts/economics
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