Market simulation

Initial situation

Prior to the change in course format, microeconomics remained a conceptual and abstract area for students. They did not mobilize their theoretical knowledge in the “real world” and did not seem to have a good grasp of its ins and outs. As a result, the format of the course was changed to give them an active role in the course through which they directly experience the theory and its fundamental contribution to practice.

Project implementation

The teacher involves the students in a simulation of an event studied in class, such as a market. The teacher sets certain conditions (each student has a single commodity to buy or sell at a fixed price), which leaves the possibility of making the simulation more complex by adding constraints.

Specifically, the teacher makes a prediction about the average price at which the commodity will sell. This prediction is based on the theory of market equilibrium. The teacher writes this number on a post-it note posted face down in front of the class. Students are randomly assigned the role of buyer or seller. Next, a playing card (with a number from 1 to 10) is randomly assigned to each student. The number on this card represents the amount of money they want to sell or buy the fictitious commodity. If the number of students exceeds 60, the teacher does not use the cards, but the online platform Pingo and offers the students a version of the auction room, where they bid by hand and exit the auction once a bid or offer is made. During the first hour of class, students will act like professionals in a market and try to find a buyer or a seller.

During the second hour of class, the teacher collects the buying and selling prices at which students have exchanged their commodities and makes a graph representing the supply and demand in the course. This is done to show the students that the point of intersection of the two curves corresponds to the prediction on the post-it note at the beginning of the lesson.

This course format allows students to directly experience key theoretical concepts. These can be diverse and varied (e.g., how a coalition is formed in a department, conflicts of interest in the public good, or the problem of the free rider). In this way, the teacher draws on each person’s own experience to construct his or her teaching.

Thoughts and advice

This type of demonstration requires a minimum number of participants, otherwise it does not reflect reality. It cannot be done with less than 20 students.

It is remarkable to see how much the students take part in the game and how this experience will impact their theoretical learning. For example, the emotion experienced - positive or negative - which is sometimes very strong, will color the theoretical learning by mixing practical knowledge and personal experience.