When the Classroom Mimics Reality: A Simulation in International Trade and Relations
Students participate in an international trade simulation in which they are "born" into a country and must produce and sell goods to survive. Countries, ranging in economic power from the United States and Japan to Ethiopia and Somalia, are endowed with a level of raw materials commensurate with their national income, and must produce at a level sufficient to maintain both their population and environmental quality. As a result of this interaction, students discover that there is a reason why poor nations remain poor, and why international relations are so problematic. Students also see firsthand the economic effects of the production process, such as the declining use of labor and increased use of capital in producing a country's output.
“This Is What I Do, and I Like It”
Fels reviews the classroom experiments presented in this issue and comments on the efficacy of experimental economics as a teaching tool.
An Experimental Imperfect Market
ITi s a commonplace that, in its choice of method, economics is limited by the fact that resort cannot be had to the laboratory techniques of the natural sciences. On the one hand, the data of real life are necessarily the product of many influences other than those which it is desired to isolate a difficulty which the most refined statistical methods can overcome only in small part. On the other hand, the unwanted variables cannot be held constant or eliminated in an economic "laboratory" because the real world of human beings, firms, markets, and governments cannot be reproduced artificially and controlled. The social scientist who would like to study in isolation and under known conditions the effects of particular forces is, for the most part, obliged to conduct his "experiment" by the application of general reasoning to abstract "models." He cannot observe the actual operation of a real model under controlled conditions. The purpose of this article is to make a very tiny breach in this position: to describe an actual experiment with a "market" under laboratory conditions and to set forth some of the conclusions indicated by it. The experiment has been carried out in a number of classes in economic theory, with the students offering themselves up as the guinea pigs. It was actually designed to illuminate a particular problem which I had analyzed earlier in abstract terms,' viz., that of the effect of deviations from a perfectly and purely competitive equilibrium under conditions (as in real life) in which the actual prices involving such deviations are not subject to "recontract" (thus perfecting the market), but remain final. It was designed also as a pedagogical experiment; and in my own experience has been found stimulating and instructive to students both (a) for their actual participation as buyers and sellers in a market mechanism and (b) for the many comparisons afforded, both of similarity and of contrast, between the laboratory market and its diverse counterparts in the real economic world. Pedagogy to one side, however, it has in its present form, yielded at least some "scientific" results. It is evidently capable of substantial variations and might possibly be extended and adapted to other problems.