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A Classroom Investment Coordination Experiment

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Listed:
  • Denise Hazlett

    (Whitman College)

Abstract

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 860 students. It does not require computers and takes approximately 50 minutes to run and discuss.

Suggested Citation

  • Denise Hazlett, 2007. "A Classroom Investment Coordination Experiment," International Review of Economic Education, Economics Network, University of Bristol, vol. 6(1), pages 63-76.
    • Handle: RePEc:che:ireepp:v:6:y:2007:i:1:p:63-76
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    File URL: https://www.economicsnetwork.ac.uk/iree/v6n1/hazlett.pdf
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    References listed on IDEAS

    as
    1. Lawrence J. Christiano & Terry J. Fitzgerald, 1998. "The business cycle: it's still a puzzle," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 22(Q IV), pages 56-83.
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    Cited by:

    1. Tisha Emerson & Denise Hazlett, 2011. "Classroom Experiments," Chapters, in: Gail M. Hoyt & KimMarie McGoldrick (ed.), International Handbook on Teaching and Learning Economics, chapter 7, Edward Elgar Publishing.
    2. Pierre Cariou & Patrice Guillotreau, 2022. "Capacity management by global shipping alliances: findings from a game experiment," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(1), pages 41-66, March.

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