Game 1: The Navigli terrace
The story
A bar on the Navigli keeps its terrace open late. The resident upstairs would like to sleep. Late nights bring in money for the bar and cost the resident sleep. One of you runs the bar (Player A), the other lives upstairs (Player B). You bargain over how many late nights a week the terrace stays open and over a payment. Who holds the right to the night air changes from round to round.
Join
- Players: envecon-games.netlify.app/games/coase-online/student.html
- Join with your first name and initial. One phone per player.
How we play
- When everyone is in, I start the random pairing. You keep the same partner and the same role for all three rounds. With an odd number of players, one of you bargains with an instructor proxy that accepts any offer.
- Each round has a five-minute clock. You bargain in the app: make an offer (late nights and a payment), counter your partner’s offer, accept, reject or walk away.
- If the clock runs out without a deal, the round ends at the status quo: whoever holds the right chooses the nights and no money changes hands.
Payoffs
Payoffs are in hundreds of euros a week. An accepted deal adds the agreed payment, paid by the party without the right to the party with it.
| Late nights per week | Bar (A) payoff | Resident (B) payoff |
|---|---|---|
| 0 | 0 | 12 |
| 1 | 4 | 10 |
| 2 | 6 | 6 |
| 3 | 6 | 4 |
| 4 | 9 | 2 |
| 5 | 10 | 1 |
| 6 | 11 | 0 |
The rounds
- Round 1. The bar holds the right. No deal means six late nights. The resident can pay the bar to close earlier.
- Round 2. The resident holds the right. No deal means no late nights. The bar can pay the resident to stay open.
- Round 3. Same rights as round 2. Any accepted deal with a positive payment costs 5 in legal fees, split between the two of you as part of the offer. Decide whether a deal is still worth it.
Tips
- The offer preview shows both payoffs before you send an offer.
- Walking away ends the round for both of you.
- Before each round, write down what you expect to happen. We compare expectations with outcomes afterwards.
Think about
Watch two things across the rounds: the number of late nights the pairs agree on, and who pays whom how much. Which of the two changes when the right changes hands? What does the legal fee do to the deals? We come back to both in the lecture.