Oligopoly: Go to jail. Go directly to jail.....

Here’s a fun resource for teaching some of the principle’s behind Game Theory and the old Prisoners’ Dilemma story which might be useful in your planning for next year. The zipped file below contains an interactive Powerpoint file called ‘Oligopoly’ with a very simple premise - the non-colluding teams have to make a simple but important decision. Should they ‘drop prices’ or ‘advertise’?

The dilemma facing the teams is that the best decision would be to drop prices (as this would draw in more customers) but only if the other teams don’t follow suit. I’ve set up a point scoring system that rewards one or two teams if they are the only ones to price drop and rewards all the teams if they choose to all advertise. This is the resource I use to try and demonstrate price rigidity in oligopolistic markets. You can even let them collude if you wish, the results are invariably the same - that is that your students will carry on acting selfishly (by dropping prices) but lose points because some others do the same.

All the instructions are on the Powerpoint file, along with the worksheets and cards needed to run the game. Please Note: the Powerpoint file has ‘macros’ within it and you will be prompted to enable them before you start using the file. The Powerpoint file is not compatible with any version of Powerpoint before 2007(XP).

Go_To_Jail_Oligopoly.zip