R&D Race
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- Each firm simultaneously chooses how much to invest in a disease cure
- After investments made, the firm choosing the highest investment finds the cure fastest (wins)
- Only this highest investing firm earns revenues (value of winning)
- Firms differ in value of winning
- Your screen displays:
- number of firms;
- your value of winning; and
- range of possible values of winning.
- Adjust the slider to choose your Investment and press Spend.
- Your Payoff = Your Revenue - Your Investment
- For Winner: Revenue = Value of Cure
- For Non-Winners: Revenue = $0
- Firm 1: Value of Winning=$20; Investment = $11
- Firm 2: Value of Winning=$16; Investment = $8
Firm |
Revenue |
– |
Investment |
= |
Payoff |
Firm 1 |
$20 |
– |
$11 |
= |
$9 |
Firm 2 |
$0 |
– |
$8 |
= |
–$8 |