For the past several years I have run a simulation in my Consumer Econ class that is very similar to the activity we did at the beginning of Econ 551 - Establishing Market Price. It is a fun, interactive activity that my kids always enjoy and miraculously it has always worked. I was a bit nervous running the game yesterday as I have very small classes this semester (15 & 8) and I wasn't sure it would work. My first class of 15 went pretty smooth - we went through the 3 rounds of exchanges and the kids all agreed on a "fair" market price - it was slightly lower than the values predicted (only $.10). My theory is that the buyers were some pretty assertive and savvy players and they basically "beat" the sellers for the extra ten cents. I was really interested to see if it would work for my small class - only 7 kids showed up. It Worked! One of the sellers had it figured out at the beginning of round two, had set his price and essentially quit any negotiations - it was his price (which was $.10 higher than simulation equilibrium price) or no deal. By the third round all deals were made within a $.20 window near the equilibrium price, with the exception of 3 deals that were way below the established price. I quickly learned why - one of the buyers used her pretty smile to dupe an awkward seller - so the simulation always works except when teenage hormones come into play.
Levi Hahn
No comments:
Post a Comment