Games Economists Play: Games 141 - 150
| Game: #141 | |
| Course: | Micro |
| Level: | Principles and up |
| Subject(s): | Public goods |
| Objective: | To illustrate the nature of the free rider problem and potential solutions for public goods provision. |
| Reference and contact: | Melanie Marks, David Lehr, and Raymond T. Brastow, “Cooperation versus Free-Riding in a Threshold Public Goods Setting: A Classroom Experiment" Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=385380 |
| Abstract: | The standard subscription based public goods experiment is modified to incorporate a provision point (threshold). If the sum of contributions covers the predetermined project costs, then the project is provided; otherwise all contributions are returned. The all-or-nothing feature of the provision point rule raises the cost of free-riding so that there is no dominant strategy to free ride under the rule. In other words, students must choose their level of cooperation. |
| Class size: | 10 students (larger classes can divide students into groups) |
| Time: | One 50 minute class |
| Variations: | Allow communication, different reward mechanisms, different number of periods |
| See also: | Public goods games |
| Game: #142 | |
| Course: | Macro |
| Level: |
Principles and up |
| Subject(s): | Money and banking |
| Objective: | To demonstrate why banks and central banks exist. |
| Reference and contact: | Paul Woodburne, "A Money and Banking Simulation Game for High School Upperclassmen and College Level Non-Majors" Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=390765 |
| Abstract: | A simulation game that illustrates the role of banks as “informational specialists.” Students are divided into four towns, each comprised of four shops and a trading company. Each shop is presented with a shopping list in which they must purchase items from all shops in all towns. The game is divided into three rounds. There are no banks in round one and all trades take place with bills of exchange issued by each town’s trading company. Furthermore, out-of-town bills are costly to exchange. In round two a single bank for all towns exists to examine the credit worthiness of all trading companies and issues bank notes for credit worthy bills of exchange. In round three a central bank is introduced. |
| Class size: | 50 students with movable desks |
| Time: | n/a |
| Variations: | n/a |
| See also: | Money games |
| Game: #143 | |
| Course: | Micro |
| Level: | Principles and up |
| Subject(s): | Long run competitive equilibrium |
| Objective: | Demonstrates the long run adjustment process toward a competitive equilibrium. |
| Reference and contact: | Stephen L. Cheung, "A Classroom Entry/Exit and Supply Game with Price Taking Firms" Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=395580 |
| Abstract: | Students take on the role of price-taking firms facing identical increasing marginal costs and differing fixed costs and engaged in short-run and long-run decision making. Firms must decide whether or not to enter a market, thereby incurring a fixed cost. The market price is determined by the instructor as a function of the number of firms that have entered the market. Once in the market, the firm may offer multiple units at the going price. Subsequent rounds are played until a long run equilibrium is achieved. |
| Class size: | Any number of students |
| Time: | One 50 minute class period. |
| Variations: | n/a |
| See also: | Competitive entry games |
| Game: #144 | |
| Course: | Micro |
| Level: | Principles and up |
| Subject(s): | International trade |
| Objective: | To illustrate the interaction between rich and poor nations. |
| Reference and contact: | Brian J. Peterson and Suzanne Wallace, "When the Classroom Mimics Reality: A Simulation in International Trade and Relations" Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=414606 |
| Abstract: | “Students participate in an international trade simulation in which they are ‘born’ into a country and must produce and sell goods to survive. Countries, ranging in economic power from the United States and Japan to Ethiopia and Somalia, are endowed with a level of raw materials commensurate with their national income, and must produce at a level sufficient to maintain both their population and environmental quality. As a result of this interaction, students discover that there is a reason why poor nations remain poor, and why international relations are so problematic. Students also see firsthand the economic effects of the production process, such as the declining use of labor and increased use of capital in producing a country's output.” |
| Class size: | Any size |
| Time: | One 75 minute class |
| Variations: | n/a |
| See also: | International trade games |
| Game: #145 | |
| Course: | Micro |
| Level: | Principles and up |
| Subject(s): | Pollution permits. |
| Objective: | To illustrate the mechanics and efficiency properties of a tradable pollution permit. |
| Reference and contact: | Amy W. Ando and Theresa J. Ramirez, "Tradable Discharge Permits: A Student-Friendly Game" Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=432985 |
| Abstract: | Students are grouped into six firms, each with their own marginal abatement cost schedules. In round one, firms must respond to uniform pollution standards by calculating the necessary abatement. In round two, pollution permits are uniformly distributed among firms, who are free to buy and sell permits. The instructor acts as a Walrasian auctioneer by calling out prices to equate supply and demand. Once an equilibrium price is achieved, firms calculate their abatement costs and permit costs/revenues. The net costs of the permit system can then be compared to the uniform standards system. |
| Class size: | Up to 30 students. |
| Time: | One 50 minute class period. |
| Variations: | Change number of permits; use non-uniform initial allocation of permits |
| See also: | Externality games |
| Game: #146 | |
| Course: | Micro |
| Level: | Principles and up |
| Subject(s): | |
| Objective: | |
| Reference and contact: |
Heather E. Campbell and Barbara C. McCabe, "Fun With Economics: Simulating Theory to Stimulate Learning." Journal of Public Affairs Education, Vol. 8, No. 2 April 2002 pp131-139 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=370701 |
| Abstract: | |
| Class size: | Any size |
| Time: | |
| Variations: | |
| See also: |
| Game: #147 | |
| Course: | Microeconomics, Game Theory |
| Level: | Principles and up |
| Subject(s): | Nash equilibrium |
| Objective: | To teach the Nash equilibrium solution concept. |
| Reference and contact: |
Virtudes Alba-Fernandez, Pablo Branas-Garza, Francisca Jimenez-Jimenez, and Javier Rodero-Coasano, "Teaching Nash Equilibrium and Strategy Dominance: A Classroom Experiment on the Beauty Contest." Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=437561 |
| Abstract: | A repeated version of the beauty contest game is used to let students react to other players' choices and to converge iteratively to the Nash equilibrium. |
| Class size: | Any size |
| Time: | |
| Variations: | |
| See also: | Oligopoly games |
| Game: #148 | |
| Course: | Microeconomics |
| Level: | Principles and up |
| Subject(s): | Market efficiency, market maker, arbitrage |
| Objective: | To demonstrate the efficiency of asset markets. |
| Reference and contact: | Clark L. Maxam and Mary-Carol B. Maxam. "Efficient Markets and Information Processing: A One-Hour Classroom Trading Simulation." Available from the SSRN Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=443640 |
| Abstract: | "The simulation involves putting students into teams of 4 or 5 (7 or 8 teams maximum) which function as OTC dealers/market makers in a novel asset market. The students have intimate knowledge of certain characteristics of this asset, but not full information. The simulation begins when each team posts a bid and ask price for the asset which is displayed for all market participants. Trading commences as each team is allowed to make one and only one trade with a competing market maker. Trades as well as bid/ask spreads are posted by the moderator who also interjects with commentary tailored to the knowledge level of the students (active versus passive trading, market maker risk, long and short concepts, price discovery concepts). After each round of trading, the teams are allowed to revise their bid/ask spreads. Inevitably, students find that the effective bid/ask spread in the market narrows purely as a function of trading since no new information is provided." |
| Class size: | Any size |
| Time: | one class period |
| Variations: | Use of outside traders and economic news releases to examine effects on bid/ask spreads and volatility. |
| See also: | Asset market games |
| Game: #149 | |
| Course: | Macroeconomics; Money and Banking; Experimental Economics |
| Level: | Principles; Intermediate |
| Subject(s): | Money; Costs of Barter; Medium of Exchange |
| Objective: | Origin and characteristics of money |
| Reference and contact: |
Hazlett,
Denise. [hazlett@whitman.edu] "A Search-Theoretic Classroom Experiment with Money." International Review of Economics Education Vol. 2 (2003) [online at http://www.economics.ltsn.ac.uk/iree/i2/hazlett.htm] |
| Abstract: |
Students
take the role of traders who face a double coincidence of wants problem.
As they recogize the benefits of overcoming trading frictions, students spontaneously begin using a consumption good as a medium of exchange. Trading in this environment allows students to experience the social conditions that give rise to money, namely specialisation and decentralisation. The experiment also demonstrates how a particular characteristic can make a commodity a good candidate for becoming money. Here, the commodity with the lowest storage cost spontaneously emerges as a generally accepted medium of exchange. |
| Class size: | variable (up to 100 or more students) |
| Time: | 30 minutes |
| Variations: | possible, but require perhaps more time and effort than warranted |
| See also: | Money games |
| Game: #150 | |
| Course: | Microeconomics, Public Finance, Natural Resource Economics; Environmental Economics; Game Theory |
| Level: | Undergraduate; Graduate; Consulting and Field-research |
| Subject(s): | Negative externality; Public Goods; Common-Pool Goods; Environment; Natural Resources; Institutions; Regulations; Enforcement; Nash Equilibrium |
| Objective: |
Demonstrating that managing local environmental resources
with moderately enforced government regulations can be
counterproductive, whereas nonbinding communications can be remarkably
effective. |
| Reference and contact: | Murphy, James J. and Juan-Camilo Cardenas. "An Experiment on Enforcement Strategies for Managing a Local Environment Resource." Journal of Economic Education Vol. 35, No. 1 (Winter 2004), pp. 47-61. [online: http://www.indiana.edu/~econed/issues/v35_1/5.htm] |
| Abstract: | Forest firewood extraction and water quality are inversely related. Players must decide how much time to spend collecting firewood. A payoff matrix is provided: the more time the sum of players spends in the forest, the lower the collective payoff, and vice versa. The experiment consists of this three-treatments sequence: (a) 5-8 rounds: unregulated resource extraction; (b) 5-8 rounds: extraction under an imperfectly enforced, externally imposed regulation; (c) extra rounds: group communication permitted to gauge effect as a self-regulation tool. The experiment is designed for multiple groups of n=8 students. Each group represents an autonomous game. |
| Class size: | small to very large (but will need student assistants to help with administration and record keeping) |
| Time: | 75 minutes (allows for 15-20 rounds of play) |
| Variations: | smaller group sizes (down to n=4) are discussed in text; change treatment sequence |
| See also: | Externality games |
| Copyright 2000 by Greg Delemeester
and Jurgen Brauer Last Updated: 02/20/2005 |