The Escalation Simulation and Destructive Competition Manifestation:

A Symposium




John F. Lobuts, Jr.

Associate Professor of Management Science

School of Government and Business Administration

The George Washington University

Washington, DC

Phone 202-994-6918





Eastern Academy of Management

The 24th Annual Conference

May 14-16, 1987

Boston, Massachusetts




The purpose of this symposium is to examine the detrimental effects of destructive competition which result in a phenomenon I have termed 'risk-free decision-making.' Destructive competition is first demonstrated in a simulation exercise called the Escalation Simulation, an experiential classroom learning exercise. The resultant behavioral manifestations which this simulation demonstrates, the 'risk-free decision' phenomenon, are then discussed in-depth. Discussion will also encompass how these very basic and normal behaviors lead to destructive competitive manifestation in business and industry. This simulation is a derivation of Kolb, Rubin and McIntyrels, 'Money Auction' and Raiffals, 'Escalation Game."


This experiential exercise can easily be integrated into either courses on group dynamics or conflict management.

The escalation simulation is a didactic method which illustrates the detriment al effects of destructive competition.

Alfie Kohnl 1 writing in Psychology Today, states the following:


Social psychologist Elliot Aronson has observed that 'The American mind in particular has been trained to equate success with victory, to equate doing well with beating someone.' Our society so values competition that it seems almost blasphemous to doubt its supposed connection to achievement. The relationship is, to many people, self evident.


But what does the evidence show? Do we really perform better when we are trying to beat others than when we are working with them or alone? Many psychologists, instead of taking competition's reputed benefits for granted, have put them to the test. And with astonishing regularity, they have found that making one person's success depend on another's failure -- which is what competition involves by definition -- simply does not make the grade.

This exercise has been found to produce interesting results as an introduction to the study of both group dynamics and conflict management. For more favorable results, the exercise should be set up following a discussion of such behavioral science theorists as Alfie Kohn, Elliot Aronson, Jerry Harvey and Anatol Rappaport.





  1. To examine a didactic decision-making process when each individuals satisfaction is dependent on the others               satisfaction.

     2. To examine problem-solving behavior in the decision-making process, utilizing a didactic simulation.

     3. To examine the dynamic of cooperative versus competitive behaviors and review how these behaviors affect the art of management.


Group Size

The simulation can be demonstrated to classes of 20 - 60 for

best results.


Time Required

Approximately ninety minutes

30 minutes - Introduction of Theory

30 minutes - Simulate the Auction

30 minutes - Conclusions, Summary and Recommendations




1. A roll of forty nickels - $2.00.

2. Ten to twelve pennies to make change during the auction.

3. A class member to play the role of banker and feed the auctioneer the nickels and make change.


Physical Setting


1. A room large enough to hold a class of 20 - 60 participants.

2. Five chairs in the front of room facing those class participants who will observe the simulation.



The Escalation Simulation is an experiential learning method which illustrates the detrimental effect of destructive--competition. It is easily executed in a group or classroom environment. The professor plays the role of auctioneer and selects five volunteers from the class to serve as the bidders. He then auctions off a roll or $2.00 worth of nickels, one at a time, so each volunteer must have enough pennies to start the bidding. Two regulations must be followed during the auction: (1) neither the participants nor the audience are permitted to talk, and (2) the auctioneer must receive a minimum of one penny for each nickel. I have observed that the intensity of the competition usually builds by the time the bidders reach the price five cents, and surprisingly, it is not unusual for a participant to bid six or even seven cents for a nickel.

The participants would stand to gain if they agreed (nonverbally) to collaborate with each other by allowing each to bid a penny for a nickel. By doing so, they could make a profit of 40 cents. However, collaboration, as this simulation illustrates, is rarely, if ever, achieved. In fact, I have yet to observe a Nickel Auction in which it has occurred.

The Escalation Simulation exemplifies destructive competitive behavior which often occurs in society, and in fact, is reinforced by society. We have learned to accept, if not expect, competitive behavior, in which individuals pit themselves against each other for the grand 'prize,' even though the 'prize' may actually be gained easily through collaboration.

This attitude of "winning at any cost' which society fosters, is one variable among many serving to reinforce a behavioral manifestation I have termed the 'escalation simulation." It is an attitude in which ethics and morality are often forgotten in the fight to win and which ultimately leads to the lack of ownership of behavior. As this simulation demonstrates, however, we all stand to lose from this type of attitude, whether we are talking about bidding for nickels or organizational management.



Aronson, Elliot. 1980. The Social Animal. San Francisco, CA: W.H. Freeman & Co., 3rd Edition.
Fisher, Aubrey B. 19'80. Small Group Decision Making. - Hill Book Co., 2nd Edition.
Harvey, Jerry B. 1984. 'The Abilene Paradox,' Organizational Dynamics. American Management Association.
Kohn, Alfie. 1986. 'How To Succeed Without Even Trying," Psychology Today. Vol. 20, No. 9, September.
Kolb, David A., Rubin Irwin M., and McIntyre, James M. 1971. Organizational Psychology: An Experiential Approach.           Englewood Cliffs, New Jersey: Prentice-Hall, Inc.
Rappaport, A. and Chammal, A. 1970. The Prisoner's Dilemma. The University of Michigan Press.
Raiffa, Howard. 1982. The Art and Science of Negotiation.Cambridge, Mass.: The Belknap Press of Harvard University          Press.