Students also gain an appreciation for the nature of moral hazard and adverse selection issues. Inform both buyers and sellers of the introduction of a third party payer. An Experimental Education Market with Positive Externalities . Students take on the role of either buyers or sellers of education or as interested bystanders. Each seller can sell as many years of education as they choose at a constant marginal cost.
Interested bystanders receive a spillover benefit for each year of education consumed by each buyer.
A pit auction trading institution is used. If bystanders remain inactive, the instructor can suggest specific strategies such as subsidies to buyers or sellers. An Experiment in Income Redistribution and Poverty Measurement . The sum of the contributions will then be given to a single class member. A small group of students must jointly and unanimously determine who that person will be.