Miniapple Game—Landowners Game

You own rental property in a poor neighborhood of the city. The neighborhood is an older one, and it is showing its age. The sidewalks are cracked, the streets are crumbling, and the garbage doesn't always get collected. The neighborhood is changing; it used to be a working-class area, but now more and more of the residents don't seem to have regular work. Many have given up looking. Your buildings are past their prime, too. They need new roofs, the windows are no longer airtight (many even have broken panes), the plumbing is starting to rot and the electrical service is antique. Needless to say, all your buildings need paint.

It will cost money to make the repairs, and you're not sure you'll get it back in rents. If you fix up your place and no one else does, you'll hardly be able to raise your rents at all because the buildings will still be in a rough neighborhood. And the other landowners—who put nothing into repairs—will be able to raise their rents just as much as you do! On the other hand, if a bandwagon gets started and most of the buildings are rehabilitated, then the neighborhood could get a reputation as a "hot" place to live and you could get more back in rent than you paid for repairs. If enough of the landowners are involved, you might even convince the city to initiate a special "code enforcement" program to push the holdouts into line.

What do you do?

The Play: Each person in your group (it is easiest in groups of 10) represents a landowner in the neighborhood. You must decide whether to improve your property this time or not. You must make your decision in private without colluding with your fellow landowners. Working together violates the antitrust act and will result in Federal prosecution (besides, in the real world it would be a practical impossibility to get all the property owners in a neighborhood together in a single meeting).

As each of you announces your vote (written in advance so you are not tempted to cheat), it is recorded on a scoring sheet. Once the voting is done, each player’s "earnings" (or losses) are recorded, using the schedule below. Play continues for 10 rounds or until everyone in the group votes the same way 3 times in a row.

Goal: Maximize Rents

Cost of improvements: $200/unit

Return from improvements:

% upgrade	$ rent increase
10%	$50
20-40%	$100
50-60%	$150
70%	$200
80-90%*	$250
100%	$300

*holdouts fined $100

When the game is completed, tally the scores and calculate the net gain for the neighborhood and the top rent-earner in your neighborhood. If your neighborhood stopped playing before ten rounds elapsed, count the unplayed rounds as earning the same the previous three rounds.

The Analysis: Compare your group's performance to that of other groups in the class:

What seems to be the best strategy for maximizing rents for all the landowners in a neighborhood?
What seems to be the best strategy for maximizing the rents to a single landowner?
What is the relation between these two strategies (i.e., how does the pursuit of one affect the pursuit of the other)?
How did the dynamics of the players in your group affect the outcome in your neighborhood?
Summary: What do these activities tell you about the dynamics of neighborhood growth, decline, and removal? Why are there slumlords? Why isn’t everyone a slumlord?

MSU