I got turned on to a very good web game called “Castle Wars“. The game is a computerized version Mille Bornes, but with castles and catapults. It is a lot of fun, and uses the fundamental economic principle of diminishing returns to great effect.
The game is essentially a card game, and the cards have increasing values based on the increased cost of playing them. Each card has a cost and a benefit. The way it implements the law of diminishing returns is by having the cards benefit not increase linearly with their cost. So while a card costing 1 point may gain you and advantage of 3, a card costing 5 will only gain you an benefit of 5. And a mega card costing 39 points will only gain you an benefit of 32 So the cheaper card is more cost effective.
To see the concept in action, it is best and easiest to play the game a few times. By using the law of diminishing returns, the game designer has made the game more challenging, and more fun to play. The way that the cards are used also mimic real world experience. Smaller firms tend to concentrate on the cheapest, most fundamental strategies to increase their output. As they grow, however, they must implement bigger, but less efficient methods to increase output. This is because they are in competition with other firms, who can use their greater size to hurt their competitors.
The adversarial nature of business is something that is rarely acknowledged. In a dog-eat-dog world, success is as much about smashing your enemies as it is about improving yourself.