Each student receives a cash endowment and 12 asset shares at the start of each trading session. The asset pays an uncertain dividend at regular intervals. The per share dividends are determined using a random draw from a uniform distribution. Traders submit written bids to buy or sell a given number of shares at a limit price. The instructor sorts the bids to buy and sell into demand and supply curves, thereby determining the market-clearing price and quantity.
All trades occur at the same price.
Post-game discussion can focus on whether trading prices converge toward intrinsic values or if a speculative bubble emerges. Journal of Economic Education . Spring 1999, pp. In upstream Firm A, students produce answers to 10 simple multiplication problems using a pencil and 5 small pieces of paper. In downstream Firm B, students produce paper airplanes using the same small pieces of paper.