![]() The students elect the lower level, while the instructor is the higher level governor, setting the structure and fundamental rules. No preparation is required other than to read the outline.Įvery game has payoffs, and the payoffs of the economic simulations are consumer goods, learning, and fun.Įvery economy operates within a legal infrastructure, and in the simulation, there are two levels of governance. The outline is also available at the class Internet web site from the day the class begins, for those who wish to look ahead. I provide the students with an outline of the simulation the classroom day prior to initiating it (Appendix A). One thing I learned early was to call it a "simulation" rather than a "game," as students treat the former more seriously. How does it work, how is it actually experienced, in practice? The simulation is an attempt to have students experience the market process and its relation to government, so they can apply and better appreciate their book and lecture learning. Students learn price theory in microeconomics and the role of money and banking in macroeconomics, but this is book knowledge. A few years ago, I began including an economics game that simulates an economy. The class size has ranged from 40 to 50 students. I teach the principles of microeconomics and macroeconomics courses at Santa Clara University, California. The response has been very positive for most students, who report a better appreciation of the role of entrepreneurship and governance, and how wages and prices are set in the market. As a spontaneous order, the simulations are different each time they are played there are many "side deals" among the players, and sometimes theft and corruption. After the simulation, students write a report on the experience. The results are highly dependent on the rules of the simulation. Bankers set interest rates for deposits and borrowing. The merchants make decisions as to what goods to sell, where to make and sell the goods, how much to produce, what wage to pay, and what price to charge. The instructor acts as a higher-level governor, appointing students to record the activity and manage the currency.Įach student is initially provided with $10. Students in their role as citizens adopt a constitution and elect a government that is responsible for laws, such as the protection of property rights, and the corresponding public revenue and law enforcement. The classroom is divided into three districts: Richland, Middleland, and Poorland, each with a corresponding productivity of labor. Students can choose their roles as landlords, merchants, bankers, employees, and government officials. The game attempts to simulate a market economy using goods and money. ![]() I describe in this paper an economic simulation which I conduct in some of my principles of economics classes. Fred Foldvary classroom economic simulationĭept. ![]()
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