Industrywide Patent Enforcement Strategies

To model a multi-litigation enforcement let us play a simple game. The rules of the game are as follows: There are 10 closed boxes in front of us. There is a $10 bill on top of each box. For each box, there is a 50% chance that there is a $100 bill inside the box. We have two options with each of the boxes: 1) to play the game, which entails setting aside the $10 bill on top of the box and opening the box or 2) passing, which entails collecting the $10 bill on top of the box but leaving the box unopened. If we choose to play by opening the box and if there is a $100 bill inside, we can collect it and move to the next box. However, if the box is empty, the game is over and we do not get to play other boxes. The goal is to collect the maximum amount of money. What is the optimum strategy?

20 minute read November 02, 2005 at 01:31 PM

By

Alexander I. Poltorak, Ph.d.