Abstract
In 1962, Western Mining Corporation along with M. A. Hanna and the Homestake Mining Company formed a joint venture to explore and develop iron ore deposits in Western Australia. The partners successfully developed one ore field, but failed to build an enduring business relationship. The paper uses game theory to examine joint venture dynamics. It finds that the partners could not transform a Prisoners’ Dilemma scenario into a coordination game because they failed to establish effective communication methods and an appropriate balance between contractual specification and latitude for ex post adjustment. The case reveals additional factors – differences in the size, local presence, and substitution possibilities of the players – that should be incorporated into game theory.
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