Transcript Digital Market Simulations - QUEST

Digital Market Simulations
Joe Bailey, University of Maryland
Chris Dellarocas, Boston University
Special thanks to
Il-Horn Hann, University of Maryland
Gordon Gao, University of Maryland
Background
 2007-08: Curriculum change prompted development of new
digital markets course at R. H. Smith
 MBA-style combination of information economics and two-
sided market concepts
 Based on lectures, cases
 Lots of part-time sections, 3.5h late evening sessions
 Needed an additional resource to bring concepts to life
Enter: Interactive games
 Student teams compete against each other in a series of
stylized settings that simulate elements of competition in
digital markets
 Played at beginning of each weekly session, 40-50 minutes to
complete
 Allow teams of students to teach digital market concepts to
each other
 Build excitement and curiosity that stimulates learning
Game Structure
 Each game is played on a spreadsheet that’s displayed on the
projection screen and available to all students
 Game has 5-6 rounds
 On each round each team has 3-5 minutes to make a
relatively simple decision (about the current round’s prices,
investments, etc.)
 After each round, instructors collect all responses, plug
them into spreadsheet and briefly comment
 Team that has highest profits at end of last round wins
 Winners receive sandwiches the following week
Our current list of games
1.
2.
3.
4.
5.
6.
Pricing Information
Network Effects
Lock-In
Two-Sided Markets
Competition among Shared and Proprietary Platforms
Networked Competition with Government Intervention
All games and spreadsheets available to workshop participants
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Creative commons license
No technical support
http://www.quest.umd.edu/~jpbailey/622/
Today’s Game: Two-sided markets
Suppliers
Consumers
(Content
Creators)
Platform
Today’s Game: Two-sided markets
Suppliers
Content creators care about
price but they care even more
about the size of the consumer
audience
Consumers
(Content
Creators)
Platform
Today’s Game: Two-sided markets
Suppliers
Content creators care about
price but they care even more
about the size of the consumer
audience
Consumers
(Content
Creators)
Platform
Consumers care about the
number of content creators
but they care even more
about price
Today’s Game: Two-sided markets
Suppliers
Content creators care about
price but they care even more
about the size of the consumer
audience
Consumers
(Content
Creators)
Platform
Consumers care about the
number of content creators
but they care even more
about price
Rules:
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Initially, each group has 10 suppliers and 100 consumers.
In each round you release a new version; you are able to sell new releases of the
software to all existing customers (suppliers and consumers).
In each round your group will charge two prices: one price for the supplier and
another price for the consumer.
The supplier and buyer price shall be an integer from $0 to $40.
Assume the average cost (think of it as SG&A) for each customer (suppliers and
consumers) is $10.
The goal of this game is to have the largest cumulative profit after 5 rounds.
Let’s Play !