Ask students in the pairs to choose a grade (incommunicado, of course), write it down, and hand it in. The dilemma of lack of information, or having to infer information about the partner becomes immediately apparent. This can then be linked to the prisoner's dilemma and other games and/or to antitrust regulations, to international cartels (that can legally communicate), and so on.

Students are given 5 to 7 minutes to freely trade their M&Ms with one another, within or across their wealth group. The incentive for wealth accumulation is that accumulating the 3rd M&M of a color increases the value of the portfolio, i.e., the marginal value of the 3rd M&M of a color is higher than the inframarginal values, or values of the 1st and 2nd M&Ms.

Students are provided with a handout detailing the value of each M&M, to record their trades, and to compute the value of their portfolio after each trade. Time permitting (50 or 75 minute class period), students debrief themselves, and then play a second and perhaps a third round.

Depending on the topic at hand, the instructor may use the game to illustrate a number of economic concepts relating to pareto optimality, mutually beneficial exchange, the impact of initial wealth endowment, the influence of students 'animal spirits' and intuitive grasp of trading opportunities on wealth accumulation, the difference between absolute and relative poverty, the idea of charity (one student gave some M&Ms away to the 'poor'), and so on.

In part A, students circle a letter in column (1) indicating the desired payoff row. Once the sheets are signed and handed in, a die is rolled. If it lands on an odd number, students get the payoff in the odd-column; if it lands on an even number, students get the payoff of the even-column. The 'higher' the letter (A is highest, O is lowest), the more risk the student takes (A-odd: $25; A-even: $0), the 'lower' the letter, the more risk-averse is the student (O-odd: $7.08; O-even: $7.08). Payoffs are not publicly announced.

In part B, the same procedure is followed, except that a die is rolled for each individual in class and the potential payoff for that individual is publicly announced. Then all papers are put in a bowl and only one is drawn at random to determine the actual individual payoffs for the entire class.

In part C, the entire class must agree (within 15 minutes or else the payoff is $0) which payoff-row to circle, then a die will be rolled separately for each individual to determine an 'odd' or 'even' payoff for that individual.

In all parts, payoff-transfer payments are not permitted.

Whereas the game is not specifically designed for the teaching of an economic principle, it does relate to matters economic and serves a number of pedagogically useful functions: (a) as a powerful motivator; (b) to keep the totality of interactions in mind (general, rather than partial, equilibrium aspects); and (c) to help students experience how rules help determine behavior or shape incentives to achieve desired outcomes. Additionally, the game is flexible enough to be put through the paces from relatively simple to extraordinarily complex; to be played but once, or to be played repeatedly during a quarter or semester at increasing complexity.

Second game: students are asked to preference rank the number of exams they'd like to have in the class, either 3, 4, or 5.

In either game the vote is secret, ballots are collected and tabulated in class. Under majority-rule with two rounds of voting, one can now play through the options for game one: A against B; B against C; and A against C. In twelve times of playing, two classes actually produced a cyclical majority effect! In the other cases, the order of voting determines the outcome.

For game two, the classes have generated rankings of 3-4-5, 5-4-3, and 4-5-3, but never 5-3-4 and 3-5-4, situations in which both extremes (i.e., 3 and 5) are preferred to the middle option (i.e., 4).

Playing both games can be instructive because the 'exams' vote deals with cardinal extremes, whereas the 'topics' vote doesn't (it is unreasonable to say that, e.g., the food stamp topic is an 'extreme' preference).

Dr. Sulock explains that a typical contribution ranges from $1.25 to $1.75 per student, and that the instructor can draw a number of useful lessons: (a) the optimal contribution, of course, would have been $10. Thus, each student's contribution (output) is economically inefficient; (b) economically, too little has been 'produced' (contributed) and that is the crux of the free-rider problem; (c) an efficient level of 'production' (contributions) could be achieved through taxation (an involuntary contribution); (d) if the group were smaller, a more efficient level of contributions might have emerged which is why, e.g., fire and police services in very small communities do function on the basis of voluntary contributions, rather than involuntary ones (taxes); (e) each student's contribution generates externalities (this game allows to link the topics of public goods and externalities).

Dr. Sulock lets classes play for real money. Usually around 50 percent of any one class free-rides totally (i.e., a contribution of $0). Repeating the experiment in the same class often results in all contributions being $0!

The "game" is conducted at the end of a lecture period. Students are not to communicate with one another. Prior to the next lecture, the instructor or an assistant compiles the results for display and discussion. Pedagogically, it is important not to mention anything about the free-rider concept until after the game. Students can compute their own free-rider index (amount invested in asset A divided by total investment of $100) and compare that to the class-index (average for the class already known to the instructor). Let students calculate their own individual return on investment as well (from private asset A and joint asset B).

Next, select a small group of students (perhaps only 3), invite them up front, and let them replay the game where they may freely discuss investment strategies with one another (usually, they will all invest only in asset B, thus maximizing their joint returns). This leads to a discussion of information and group size and contributions to or fund-raising efforts of non-profit organizations (such as public radio).

Finally, share the free-rider index by demographic breakdown with the class (do women behave differently than men; etc.)

A is the "controller" who will offer to make a number available. B can concur or reject. A and B may bargain over any side payments B is to make to A for A to make a number available. Unknown to the students, the number represents the number of units of a public good for which A pays (hence the negative payoff) and on which B free-rides (hence the positive payoff). After the bargaining, the instructor supplies marginal cost information for the public good and total surplus is calculated.

The experiment consists of four variations with different payoff matrices. In experiment I the players have identical preferences but only know their individual payoffs; in experiment II players have different preferences and know only their own payoffs; in experiment III players have identical preferences and know each other’s payoffs; and in experiment IV players have different preferences and know each other’s payoffs.

The results are that with "full information" (about preferences), students are more likely to choose the optimal number of public good units than under "partial information." Students learn about the public goods provision problem, about bargaining, about free-riding, about the importance of group size and differential preferences.