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Posted on 11 March 2019

Beer Game Auction

Beer-Game-Auction

 

The beer game auction is a role-playing game (simulation), related to the original Beer Game, where the players are parties in different positions in a B2B purchase process by auction. The objective of the players is to keep the sales prices as high as possible although they are acting within an auction environment. Since the individual parties are not allowed to exchange their information due to antitrust principles and only communicate via bidding prices, attention is usually focused only on winning the contract. The result is that the bidding falls very fast in cascades below the actual production costs.

The beer game auction was developed in 2014 at the University of Erlangen-Nuremberg (FAU) in the faculty of economic computer science, led by the reader Dr. Walter Demmelhuber. According to game theory, students should be able to illustrate the dynamics of an auction using a very simple game; as a consequence, the irrational behavior should be studied scientifically.

Objective of the game

The objective is distributed at the beginning of the game via mission cards which players do not reveal to each other. After that, all countries' auctions will be played. Once all auctions are over in each country, it is verified who has fulfilled his or her mission. There may be several winners, but there may may be no winners under certain circumstances.

Beer-Game-Auction

Possible mission objectives

  • Highest net profit
  • Highest market share
  • Highest sales

Set Starting Requirements

These initial conditions are specified and never change

  • 6 players
  • 4 countries
  • Beer consumption per country
  • Auction per country and game modes (for example, in Germany it is always an auction of the same kind "Reverse Auction")
  • Profit distribution of the individual auctions (eg: Italy = 1 winner, Germany = first winner gets 60%, second gets 40%)
  • Lap time about 10 minutes

Variable factors influencing players

Factors are determined at the start of every game and are subject to change under certain circumstances. Each factor has a specific weight (positive, negative). Factors need to be balanced for all players (balance). This also allows for different advantages and disadvantages for individual players to arise in certain situations.

  • Cost per 1000l
  • Transportation costs per 1000l
  • Fixed ongoing costs
  • Starting capital
  • Economies-of-scale
  • Maximum Capacity
  • Seriousness (bonus / malus)

Game/Auctions Modes

Each Game/Auctions Mode is assigned to exactly one country

  • the same auction type is used for example in Germany always
  • the four countries cover the four main types of auction
  • distribution of profits of each sale is also determined before the game begins

Equipment

Easy version download

The easy version is designed for first-time players and takes about 4h to play. 6 groups playing with one game master. Each group can consist realistically from 1 to 4 persons. Additionally to the two documents which can be downloaded, a separate Game Master document can be requested from us by eMail (it is not a secret but it would spoil the learning effect if players were to read it beforehand).

 

Advanced version download

Content as described in the article above

  • Mission Maps
  • Starting Cards
  • Printed blank chart for production planning (per player)
  • Printed blank chart for own auction planning / income (per player)
  • Summary sheet with all the upcoming auctions and the results of past auctions
  • Instructions

Review

The Beer Game Auction is easily used with its simplicity and transparency. Despite simple rules, it causes also experienced buyers to bid below cost. The learning effect as well as the curiosity and readiness for change is considerable. The disadvantage is the impact of simplicity on the generality and accuracy. The educational objectives and the applicability to companies must be clarified in advance.

Knowledge

The starting points and structure of the game determines the behavior of the players. Challenges are not due primarily to external factors. Through a cooperative mindset there would be significant improvements but this is forbidden under antitrust law.

 

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Rating: 6.0/6 (2 votes cast)
Beer Game Auction, 6.0 out of 6 based on 2 ratings

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