Amusement park pricing (context-rich problem) Students consider whether an amusement park should increase prices in order to increase revenue. Note: Student responses could be collected using clickers (see example in Clicker Questions) ... View more

A Prisoner’s Dilemma Classroom Activity with iClickers to Explain Game Theory to Economics Students This is a very simple classroom game I do with my economics students to cover ideas of Nash equilibrium and Prisoner's Dilemma.  It can also show ideas about public goods and externalities.  It is an adaption from Hemenway et al 1987 (see below).  But, it has also been used in different ways by many different instructors.  How to Setup the Prisoner’s Dilemma Classroom Experiment Extra Point Question If everyone chooses to collude, all students get 10 bonus points in final exam If everyone chooses to collude, but one person defect, that person defecting gets 50 bonus points and no other student get any points. If more than 1 person chooses to defect, no student get any points. Allow the students to vote (I use iClicker in my class; but any system would work well). Show students the results. Students are usually very upset when I show the results for the first time.  So I always allow them to play more than one round.  Sometimes in between rounds, I ask them for ideas on how to "solve" the dilemma.  Notice on the video below how the last round students are allowed to switch iClickers, yet the outcome does not change!!! Anyway, it is a great activity because it takes very little effort to prepare, students like it a lot, and it has many points for applications and discussion. Video The video below shows an instance of me playing the game with my students.  On this occasion, I had about 500+ students in the classroom playing the game.  Notice the distribution of the answers after I close the voting (remember, A) is colluding and B) is defect): most students choose to collude, but a few (around 30 or so) choose not to collude.  PPT Slides Dropbox - Slide-for-Game-Theory-Activity.pptx REFERENCES Hemenway, David, Robert Moore, and James Whitney. "The Oligopoly Game." Economic Inquiry, 25, Oct. 1987, pp. 727-730; contains copy for class instructions; moore@oxy.edu ; whitney@oxy.edu  ... View more

A Goldsmith Exercise for Learning Money Creation Journal of Economic Education 44(4) 2013 (experiment) In the exercise, students pretend they are in the eighteenth century and simulate interactions among a goldsmith, a gold depositor, a merchant, and a borrower, in order to better understand how banks create money. ... View more

Understanding the Impact of Policy (cooperative learning) This 'send-a-problem' exercise requires students to evaluate the potential impact of fiscal and monetary policy on problems associated with different states of the economy. Can be scaled up for any size class.   ... View more

Just to See You Smile (Econ video, song by Tim McGraw) Singer will do 'anything' for his girlfriend, indicating his demand for her is perfectly inelastic. ... View more

Impact of federal deficits (cooperative learning) Students analyze different endings to a fable about government debt. Answer to follow-up questions could be collected using clickers   ... View more

Discouraged workers (context-rich problem) Students calculate different versions of the unemployment rate to understand the definition of who is and is not employed. Responses could be collected using clickers.   ... View more

Economic growth game (experiment) Student groups represent regions that specialize in particular items; in each round, they must trade with other regions to survive and grow. ... View more

Ticket trading (experiment, demonstration) Students are given tickets and asked to report their willingness to pay for their assigned ticket; they are then given an opportunity to trade and willingness to pay is re-calculated. Extensions include restricting and then opening who students can trade with, and allowing students to place monetary bids for certain tickets. For larger classes, can be done with a sub-set of students as a demonstration for the rest of the class. Have students predict what will happen to total social benefit between rounds. Can follow with discussion of allocation mechanisms by asking students for alternative ways to allocate the tickets. Please see Trade Clicker Questions​ document.   ... View more

(experiment) Students produce different combinations of two products (links and smiles) with a given set of resources. The results are used to create PPFS. For larger classes, could be done with a sub-set of students as a demonstration for the rest of the class. Follow-up questions for a representative graph could be asked using clickers.   ... View more

  The following classroom activity is a fun way of introducing the benefits of trade, and can be used in both small and large classrooms. For small classes (< 20 students), I use this activity on the first day of class as an icebreaker, allowing students to introduce themselves. For large classes, I wait until I cover trade, and ask for 12 volunteers to come to the front of the classroom. Preparation: Purchase 12 or more random items at a Dollar Store. Find items that would be useful for some students but not others. Ideal items include a cat toy, tape measure, thank you cards, Spiderman tooth brush, Hello Kitty stickers, chocolate, pack of gum, box of candy, basic calculator, band aids, and balloons. Place each item in a brown paper bag and staple it shut. Part 1: Have each participating student select a bag containing a random gift. Part 2: Have each student introduce themselves, and then open the bag. The student then describes the item (this part is often funny depending on the item), and the rates the value of the item on a scale from 1 (worthless) to 10 (extremely valuable). Have a TA or another student keep track of names and values. Part 3: Tell the students that these gifts are theirs to keep. However, you are allowing them an opportunity to obtain a more valuable gift to them by trading with any other student, if they choose. Allow one minute to allow students to trade. Part 4: Have each student state whether they traded their item; and if they did, rate the new item. Part 5: Show the class the list of students and gift ratings. Show the first column, and explain the concept of autarky (no trade). Although every item was purchased for $1, the ratings are very different from one another. This illustrates the difference between production efficiency and allocative efficiency. Production efficiency is achieved because each student received a gift at the lowest cost (effort of volunteering), but allocative efficiency was not achieved because not everyone ended up with something they desired. Compare this scenario with a real-life example of something a country is good at producing but doesn’t consume; for example, China produces NFL jerseys efficiently, though hardly anyone in China buys them. Then discuss how trade allows some students to improve their outcome without anyone else being worse off. This is a Pareto efficient improvement, and also improves allocative efficiency. Calculate the total gains from trade by comparing the totals before and after trade. Lastly, discuss why some people are against trade. Explain that in this activity, every student represented a country. In reality, every country has many people. If instead we had groups of students representing a country, some members might end up with an item that others in the group wanted. In other words, although countries benefit, not everybody in the country benefits. This activity takes just 10 to 15 minutes of class time, and is a fun way to introduce trade and efficiency concepts. ... View more

Trading with comparative and absolute advantage (cooperative learning, experiment) Students are separated into groups, representing different countries, and given worksheets with production information. One country has an absolute advantage in both goods. Groups choose resource allocations to maximize utility and then can trade with the other country. For larger classes, can have multiple groups for each country (just have an equal number of groups for each country) and then pair up groups for trading. There are many variations of this available (for example, see here, and here)   ... View more

Double-oral auction (experiment) The grand-daddy of economics experiments! Students are assigned roles as buyers and sellers, and trade in a simulated market. There are many, many variations of this activity (see, for example, here or here). Extensions can include shifting supply or demand, imposing price controls, taxes, or trade barriers. For very large classes, this activity may be best done using online tools, such as Veconlab or Moblab ... View more

Determinants of demand and supply (cooperative learning) Students are assigned one of the determinants of demand or supply and must come up with an example of their assigned determinant, then show the impact of that change on equilibrium. ... View more

Corn prices (context-rich problem) Students are asked to explain the impact of rising corn prices on secondary markets. Can have students complete individually, with think-pair-share or small groups. In larger classes, student responses can be collected using clickers.   ... View more