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Treasure game

Author

Listed:
  • Matros, Alexander
  • Smirnov, Vladimir
Abstract
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.

Suggested Citation

  • Matros, Alexander & Smirnov, Vladimir, 2011. "Treasure game," Working Papers 2011-10, University of Sydney, School of Economics, revised May 2014.
    • Handle: RePEc:syd:wpaper:2123/7867
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    File URL: http://econ-wpseries.com/2011/201110-02.pdf
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    References listed on IDEAS

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    Cited by:

    1. Matros, Alexander & Ponomareva, Natalia & Smirnov, Vladimir & Wait, Andrew, 2019. "Search without observability," Working Papers 2019-04, University of Sydney, School of Economics.
    2. de Roos, Nicolas & Matros, Alexander & Smirnov, Vladimir & Wait, Andrew, 2018. "Shipwrecks and treasure hunters," Journal of Economic Dynamics and Control, Elsevier, vol. 90(C), pages 259-283.
    3. Matros, Alexander & Smirnov, Vladimir, 2016. "Duplicative search," Games and Economic Behavior, Elsevier, vol. 99(C), pages 1-22.

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    Keywords

    R&D; search; uncertainty.;
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