Games Economists Play: Games 151 - 160
| Game: #151 | |
| Course: | Macroeconomics; Money and Banking; Corporate Finance; Monetary Theory |
| Level: | Principles; intermediate |
| Subject(s): | Behavioral foundations of macroeconomics; money demand; risk; portfolio allocation |
| Objective: | Observe how aggregate money demand responds to asset volatility (risk) |
| Reference and contact: | Bradley, T. Ewing, Jamie B. Kruse, Mark A. Thompson. "Money Demand and Risk: A Classroom Experiement." Journal of Economic Education Vol. 35, No. 3 (Summer 2004), pp. 243-250. [online: http://www.indiana.edu/~econed/issues/v35_3/3.htm] [Contact: bradley.ewing@baylor.edu] |
| Abstract: |
Students
receive a $100 (play) endowment; they allocate any
desired portion of their endowment among no-risk (=consumption),
low-risk, and high-risk assets (in terms of volatility); riskiness (low
or high) is announced prior to allocation decision; actual riskiness is determined, post-allocation, by coin-flip (and associated risk multipliers for heads or tails); usual outcome: the high-risk scenario results in higher no-risk allocations than the low-risk scenario. |
| Class size: | scaleable (and tested in classes with up to n=180, with two assistants) |
| Time: | 50 minutes (for about 10 rounds of play) |
| Variations: | none mentioned |
| See also: | Money games |
| Game: #152 | |
| Course: | Game Theory |
| Level: | Intermediate |
| Subject(s): | Rules of game; strategic player; role of information |
| Objective: | To understand the "should you switch doors?" Monty Hall game |
| Reference and contact: | Brokaw, Alan J. and Thomas E. Merz. "Active Learning with Monty Hall in a Game Theory Class." Journal of Economic Education Vol. 35, No. 3 (Summer 2004), pp. 259-268. [online: http://www.indiana.edu/~econed/issues/v35_3/5.htm] |
| Abstract: | Two-person, sequential game with perfect information; instructor chooses two students at random who are to retrieve an envelope placed in the building; after retrieval, two other identical envelopes are placed on the desk; two envelopes contain cents-off coupons); one envelope contains $10; the two students are to point to one of the three envelopes that they wish to choose to open; the instructor then opens one of the other two envelopes (that contains coupons) and asks whether the students wish to switch their choice from the envelope they pointed at to the remaining envelope on the desk; if desired, the audience can give advice to the students; lively debate ensues - with almost never the game-theoretically correct reasoning; after the envelope is chosen, explain the correct answer as outlined in the article. |
| Class size: | small to very large |
| Time: | less than one class period |
| Variations: | none mentioned |
| See also: | Game Theory games |
| Game: #153 | |
| Course: | Macro |
| Level: | Principles and up |
| Subject(s): | Inflation |
| Objective: | To illustrate the derivation of a consumer price index and its potential biases. |
| Reference and contact: | Hazlett, Denise and Cynthia D. Hill. "Calculating the Candy Price Index: A Classroom Inflation Experiment" Journal of Economic Education. 34(3), Summer 2003, pp. 214-223. [online: http://www.indiana.edu/~econed/issues/v34_3/5.htm] |
| Abstract: | Students develop a consumer (fixed-weight) price index based on purchasing decisions made by fellow students and can observe substitution, quality, and new-product CPI biases. |
| Class size: | 10-135 students |
| Time: | One 50 minute class period |
| Variations: | n/a |
| See also: | Inflation games |
| Game: #154 | |
| Course: | Macro |
| Level: | Principles |
| Subject(s): | Fiscal and Monetary Policy |
| Objective: | Understanding and reviewing the functioning of monetary and fiscal policy instruments |
| Reference and contact: | Mary Eschelbach Hansen (2006), “Masters of the Economy.” ONLINE. Available: http://academic2.american.edu/~mhansen/MastersGame. Contact: mhansen@american.edu. |
| Abstract: | Pairs or teams of students direct fiscal and monetary policy with the goal of achieving a constant three percent growth in GDP in the economy. The basic version provides a review of the basics of monetary and fiscal policy tools. The game prompts students to categorize policy tools as either monetary or fiscal policy. Students then choose a specific policy action, such as a decrease in taxes, and indicate how it is expected to change GDP. Finally, students calculate the magnitude of the desired effect. |
| Class size: | Unlimited; played in groups of 2 to 6. |
| Time: | One (50 minute) class period for basic game. Can be assigned as group homework. |
| Variations: | The game has three versions; versions progress in complexity. The first variation on the basic game allows the actual effect of policy actions to differ from the intended effects through the introduction of uncertainty. The second variation introduces the problem of coordination between fiscal and monetary authorities. |
| See also: | Fiscal policy, Monetary policy, Economic growth |
| Game: #155 | |
| Course: | Micro, Environmental Economics, Law and Economics |
| Level: | Intermediate and up. |
| Subject(s): | Regulatory compliance |
| Objective: | To illustrate how the probability and severity of enforcement affects incentives for regulatory compliance. |
| Reference and contact: | Anderson, Lisa R. and Sarah L. Stafford, "Does crime pay? A classroom demonstration of monitoring and enforcement." Southern Economic Journal, April 2006, Vol. 72, No. 4, pp. 1016–1025. |
| Abstract: |
Students play the role of firms that must comply with pollution regulations under varying degrees of regulatory enforcement. The instructor, playing the role of the regulatory agency, announces the enforcement strategy prior to each decision period. After students have made their decisions on whether to comply, the announced enforcement strategy is imposed. The baseline strategy is to randomly select one firm for inspection and, if found in noncompliance, to impose a $1000 fine. Additional decision rounds vary the enforcement strategy by altering the probability of inspection and/or the level of the fine. |
| Class size: | The experiment is designed for 20 "firms." |
| Time: | 50-minute class |
| Variations: | Asymmetric costs, targeted enforcement, contestable fines, and a public goods version are discussed. |
| See also: | Institutions, Externalities |
| Game: #156 | |
| Course: | Micro, Health Economics, Public Economics |
| Level: | Intermediate and up |
| Subject(s): | Asymmetric information and adverse selection |
| Objective: | To illustrate that asymmetric information leads to adverse selection. |
| Reference and contact: | Mellor, Jennifer M. "Illustrating adverse selection in health insurance markets with a classroom game." Southern Economic Journal, October 2005, Vol. 72, No. 2, pp. 502–515. |
| Abstract: |
Students take on the role of health insurance buyers and sellers. In part one of the game, there are two buyer types: high-risk and low-risk. Early periods are played under full information while later periods are played under asymmetric information conditions (in which sellers must sell their policies to all buyers at the same price). In part two of the game sellers may offer two types of health insurance policies: moderate coverage and generous coverage. As before, the early periods are played under full information while later periods are played under asymmetric information. |
| Class size: | Groups of 10 to 35 students. |
| Time: | One 75-minute period to run both parts of the game. |
| Variations: | n/a |
| See also: | Information games |
| Game: #157 | |
| Course: | Micro, Public Finance, Urban Economics, Law and Economics |
| Level: | Intermediate and up |
| Subject(s): | Public goods, Tiebout Hypothesis, Median Voter |
| Objective: | Illustrates the efficiency consequences of the provision of local public goods under conditions of mobility and voting. |
| Reference and contact: |
Hewett, Roger, Charles A. Holt, Georgia Kosmopoulou, Christine Kymn, Cheryl X. Long, Shabnam Mousavi, and Sudipta Sarangi. "A Classroom Exercise: Voting by Ballots and Feet." Southern Economic Journal, July 2005, Vol. 72, No. 1, pp. 253–263. |
| Abstract: |
Students are divided into five communities with one member from each chosen as the community's mayor. A deck of playing cards is used to induce preferences over four different public goods (corresponding to the different suits). Each student receives three cards and the sum of cards of a given suit determines the value of the public good. Students are then allowed to move to a community that provides a level of the public good to their tastes as determined by a majority vote. The cost of the public good is divided equally among all community members. The game is repeated for several rounds until students sort themselves into their preferred communities. |
| Class size: | 15 to 30 students, though the setup can be amended to handle larger classes. |
| Time: | A 50-minute class for experiment and discussion. |
| Variations: | n/a |
| See also: | Public goods games |
| Game: #158 | |
| Course: | Micro, Public Finance, Public Choice |
| Level: | Principles and up |
| Subject(s): | Median voter, Political equilibrium |
| Objective: | To illustrate the equilibrium prediction of the median voter model. |
| Reference and contact: | Wilson, Rick K. "Classroom Games: Candidate Convergence," Southern Economic Journal, April 2005, Vol. 71, No. 4, pp. 913–922. |
| Abstract: | Students take on the role of either candidate or voter in a series of elections over a single issue. In each election period, two students are randomly chosen as candidates. A flip of the coin determines which candidate is the incumbent. The incumbent chooses their policy position first; the challenger can not choose the same position as the incumbent. The rest of the students then vote for the candidate of their choice using a majority rule for determining the winner. The election cycle is repeated by randomly choosing a new challenger to face the winner of the election. |
| Class size: | Any size. |
| Time: | 30 minutes for the experiment. |
| Variations: | Later rounds introduce a shift in the preferences of voters. |
| See also: | Public choice games |
| Game: #159 | |
| Course: | Micro, Industrial Organization, Environmental Economics |
| Level: | Principles and up. |
| Subject(s): | Price discrimination |
| Objective: | To illustrate the social welfare consequences of price discrimination. |
| Reference and contact: |
Michael, Jeffrey, Arthur Zillante, Sarah Stafford, Greg Buchholz, Katherine Guthrie, and Julia Heath. "The Campus Parking Game: A Demonstration of Price Discrimination and Efficiency." Southern Economic Journal, January 2004, Vol. 71, No. 3, pp. 668–682. |
| Abstract: | Students are divided into four types of commuters: faculty, and three different student types. There are four parking lots available. Each commuter has difference preferences over the different parking lots. For the first decision session, the instructor announces a uniform price schedule for all lots that ensures all commuters will find a parking spot. Using index cards to represent their cars, students park their car by putting their index card in a box representing their preferred lot. If a lot is over capacity, the necessary cars are randomly removed and each commuter is charged a search cost. The session continues until all commuters find a parking lot or decide to stay home. Later sessions introduce a uniform profit-maximizing price, third-degree price discrimination, a hybrid third-degree price discrimination, and a second-degree price discrimination scheme. |
| Class size: | Any number. |
| Time: | One 50-minute class period. |
| Variations: | Introducing parking attendants that can negotiate parking fees for each lot; having students serve as a parking committee that must determine prices. |
| See also: | Monopoly games |
| Game: #160 | |
| Course: | Macro |
| Level: | Principles and up. |
| Subject(s): | Unemployment |
| Objective: | To demonstrate how unemployment compensation affects unemployment rates and wages. |
| Reference and contact: |
Hazlett, Denise. "A classroom unemployment compensation experiment." Southern Economic Journal, January 2004, Vol. 70, No. 3, pp. 694–704. |
| Abstract: |
Students participate in two labor markets (skilled and unskilled) using the double oral auction mechanism as either workers or employers. Phase I of the experiment involves no government intervention. Phase II of the experiment introduces unemployment compensation |
| Class size: | Works best with 16 to 50 students, though it has been run with 12 to 90 students. |
| Time: | One 50-minute class period. |
| Variations: | Wage subsidies to employers or employees; a minimum wage |
| See also: | Unemployment and Labor Market games |
| Copyright 2000 by Greg Delemeester
and Jurgen Brauer Last Updated: 01/25/2007 |