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International Trade
MobLab Game: Comparative Advantage
Key Teaching Points:
- The distinction between absolute and comparative advantage.
- Experience first hand the gains from specialization and trade.
- Differences in opportunity costs lead to mutually beneficial trade.
Supply and Demand in a Competitive Market
MobLab Game: Competitive Market
Key Teaching Points:
- The “invisible hand” of the market: how individual profit maximization leads to competitive market equilibrium.
- The equilibrium market-clearing price results from the valuations of different buyers and costs of different sellers.
- Gains from trade (i.e., consumer and producer surplus).
- Shifts in either supply or demand change equilibrium outcomes.
Asset Valuation
MobLab Game: Asset Market (Bubbles and Crashes)
Key Teaching Points:
- Highlights the determinants of an asset’s value: income generated and resale value.
- Shows how asset bubbles may develop even with common knowledge about an asset's terminal value and distribution of dividends.
Risk Preferences
MobLab Game: Risk Preferences: Bomb-Risk Game
Key Teaching Points:
- Individuals differ in their tolerance for risk. (There is no “right” answer.) Risk preferences displayed is this game might well predict behavior in other risky environments (e.g. Loan Market).
- Expected payoff is maximized by opening 50 boxes. Opening fewer boxes is consistent with risk aversion, while opening more is consistent with risk-preferring behavior.
MobLab also has a number of pre-built surveys related to risk, including Holt Laury as well as Binswanger risk elicitation.
Money, Banking, and Deposit Insurance
MobLab Game: Bank Run
Key Teaching Points:
- Experience how early withdrawals lead to panic and spur others to withdraw, hastening bank failure.
- Policy interventions, such as deposit insurance, can reduce the likelihood of bank runs.
Labor Markets and Unemployment
MobLab Game: Simple Labor Market
Key Teaching Points:
- When a perfectly competitive market determines wages, the equilibrium wage (per unit of labor) is equal to the value of the marginal product of labor of the last worker hired.
- Highlight how policies such as unemployment insurance and the minimum wage affect both the structural and natural rate of unemployment.
Credit Availability and the Fisher Effect
MobLab Game: Loan Market
Key Teaching Points:
- Show students that nominal prices of the loan contracts increase by the rate of inflation when inflation is known.
- When the inflation level is unknown, risk averse lenders will ask for higher repayment amounts to compensate for risk in price change. This will lead to a reduction in available credit in the market.
Other Relevant Games
- (Keynesian) Beauty Contest pairs well with Asset Market. It helps ilustrate the speculative hypothesis for bubbles, i.e., individuals differ in their trading strategies depending on their beliefs about the sophistication of others.
- Herding (Information Cascades) pairs well with Bank Run. Individuals are embedded in groups where social learning occurs and people follow the herd.
- Time and Risk Preference Surveys help to illustrate important considerations in macroeconomic models.