MobLab
Instructions
Aa

# R&D Race

## Background

• Each firm competes to find a disease cure by investing into R&D
• Firms differ in the value of finding the cure
• At any point, you may choose to increase your current investment
• This increased investment must make you the firm with the highest current investment
• At the end of the game, the firm that invested the most finds the cure fastest (wins)
• Only this highest investing firm earns revenues (value of winning)

## How to Play

• number of firms;
• range of possible values for winning; and
• current investments, sorted from highest to lowest.

## Payoff Computation

• Payoff = Revenue - Investment
• For Winner: Revenue = Value of Cure
• For Non-Winners: Revenue = \$0

## Example

• Winning firm's investment = \$72 million
• Winner's value for the cure = \$76 million
• Three other non-winning firms:
• Non-Winner 1 investment = \$55m,
• Non-Winner 2 investment = \$47m
• Non-Winner 3 investment = \$0
Firm Revenue Investment = Payoff
Winner \$76m \$72m = \$4m
Non-Winner 1 \$0 \$55m = –\$55m
Non-Winner 2 \$0 \$47m = –\$47m
Non-Winner 3 \$0 \$0 = \$0