Experiential Learning of the Efficient Market Hypothesis: Two Trading Games
In goods markets, an equilibrium price balances demand and supply. In a financial market, an equilibrium price also aggregates people's information to reveal the true value of a financial security. Although the underlying idea of informationally efficient markets is one of the centerpieces of capital market theory, students often have difficulties in grasping and accepting that asset prices fulfill this dual role of information revelation and demand-supply aggregation. The author presents two simple classroom games that illustrate the workings of information transmission and aggregation through prices. The games are easy to comprehend, simple to implement, and short. Each game, including classroom discussions, takes about 30 minutes. By the end, students will have an intuitive feel for informational efficiency.
Volume (Year): 41 (2010)
Issue (Month): 4 (September)
|Contact details of provider:|| Web page: http://www.tandfonline.com/VECE20 |
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/VECE20|
When requesting a correction, please mention this item's handle: RePEc:taf:jeduce:v:41:y:2010:i:4:p:353-369. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.