Negotiation Simulation: OPEQ

by Wharton School of the University of Pennsylvania

$150 / seat
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Simulation Overview

In this highly interactive, team-based simulation, groups of students act as member nations of “OPEQ,” setting petroleum production levels with competing countries in order to maximize cumulative profits. Tension between cooperation and self-interest intensifies with each round of the game: cooperation has great benefits, but individuals have incentives to defect. The simulation explores the dynamics of cooperation and competition, negotiation, best response, Nash equilibrium, and other economic principles.

The Story

Each “world” consists of three or more countries that produce petroleum. Each country is played by a small team of students, working in varying degrees of isolation from the other countries.

The market price of oil for each round of the simulation is a function of the total quantity of oil produced by the countries within a world. Each country would like to produce and sell more oil to maximize its own profits; however, the price of oil declines as total supply increases.

In each round, the three countries individually make their production decision for the coming year — and only find out how much total oil is produced after the simulation advances to the next round. Trust, negotiation, communication and signaling are key because each country is setting its production quantity with imperfect knowledge. Students gain critical insight into the mechanics of cooperation and how to manage cooperative relationships.

Learning Focus

  • Explore the factors that promote and inhibit cooperation, including communication, competition, relational frame, accountability, group size, and future relationship
  • Gain critical insight into the mechanics of cooperation
  • Understand how superordinate goals and social comparisons can build, break, or restore trust
  • Introduce social dilemmas and game theory
Topics Covered

  • Cooperation
  • Negotiation
  • Trust
  • Social Dilemmas
  • Game Theory
  • Cooperative Quantity, Optimal Point of Defection, Nash Equilibrium
Additional Information
Duration

1 to 3 hours including introduction and debrief

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