“A Classroom Investment Coordination Experiment”

 

Last week, we added “A Classroom Investment Coordination Experiment” by Denise Hazlett (IREE 2007 , the paper is dowloadable here https://www.economicsnetwork.ac.uk/iree/v6n1/hazlett.pdf)


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Abstract of the paper:

“In this classroom experiment students represent firms that make investment decisions. They play a repeated game with each firm privately choosing its level of investment. Participating in the experiment helps students understand theories that posit coordination failure as the cause of economic fluctuations. Students see that when firms expect a recession, their resulting low levels of investment actually cause a recession. Likewise, when firms expect an expansion, their resulting high levels of investment cause an expansion. The experiment can be used in undergraduate principles or intermediate macroeconomics classes of 8–60 students…”

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