Gains from Trade and International Trade
MobLab Game: Comparative Advantage
Key Teaching Points:
- Shows that trade makes both individuals better off, even when one has an absolute advantage in both goods.
- With total input costs fixed, the comparative advantage game shows how opportunity cost affects production decisions for a firm.
Supply, Demand, and Equilibrium
MobLab Game: Competitive Market
Key Teaching Points:
- Experience the “invisible hand” of the market; individual profit maximization leads to competitive-market equilibrium.
- Show that the competitive-market equilibrium maximizes total surplus (absent external costs or benefits).
- Explore how shifts in supply and demand alter equilibrium predictions.
Market Interventions
MobLab Game: Competitive Market with Interventions
Key Teaching Points:
- Demonstrate the equilibrium and surplus effects of common government interventions: per-unit taxes and subsidies, price ceilings and floors.
Long Run Equilibrium
MobLab Game: Production, Entry & Exit
Key Teaching Points:
- Short-run profit maximization involves thinking at the margin.
- Show how firm entry and exit decisions are affected by the decisions in the previous round, and if the market entrants earned a profit or not.
- In the long-run equilibrium of a competitive market with identical firms, all firms earn zero economic profits.
Monopoly
MobLab Game: Monopoly
Key Teaching Points:
- Review the effects of market quantity on price.
- Profit maximization involves thinking on the margin.
- Compare output and price to under monopoly to the perfectly competitive market.
Oligopoly and Collusion
MobLab Game: Cournot
Key Teaching Points:
- Experience profit maximization when there is strategic interdependence.
- Gain an understanding of the underlying logic of the Cournot model; how market price is determined by the aggregation of simultaneous output.
- Observe the Cournot equilibrium and the impact of repeat interaction.
Oligopoly Behavior in a Game Theory Setting
MobLab Game: Prisoner’s Dilemma (Matrix) and Prisoner’s Dilemma (Push and Pull)
Key Teaching Points:
- Shows the conflicting incentives of cooperation and self-interest.
- Gain familiarity with reading payoff matrices and the key concept of a dominant strategy.
- Identification of Nash equilibrium.
- Demonstrates that repeat play can lead to more cooperative outcomes.
Push and Pull is a non-matrix version of the Prisoner’s Dilemma.
Externalities
MobLab Game: Externalities with Policy Intervention
Key Teaching Points:
- Show a divergence between market price and quantity and the socially optimal price and quantity for an externality-generating good.
- Explore interventions like tax, subsidy, and tradable permits for externality generating goods.
Public Goods and Free Riding
MobLab Game: Public Goods: Linear
Key Teaching Points:
- Highlights the features of public goods: non-rival and non-excludable.
- Shows the tension between individual and group welfare.
- Experience the free-rider problem.
Common-Pool Resources
MobLab Game: Commons: Fishery
Key Teaching Points:
- Individual profit maximization leads to overuse of a common-pool resource.
- Communication and repeat-play may lead to better outcomes than predicted on standard theory.
Asymmetric Information
MobLab Game: Market for Lemons
Key Teaching Points:
- Experience a market with asymmetric information.
- Asymmetric information may lead to adverse selection and market failure.
Labor Market
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.
- By reducing the quantity demanded of labor, a minimum wage decreases employment.
Inequality and Fairness
MobLab Game: Ultimatum Game
Key Teaching Points:
- Demonstrates how social norms such as fairness and altruism may factor in the decision-making process for economic actors.