Economics Classroom Experiments/Introductory Strategy

Experiments for an Introductory Course in Strategy

This is a sequence of nine classroom experiments suitable for a semester-long (14 weeks) introductory course in "strategy," defined here as "principles of game theory." This sequence was developed for a course "Economics of Decision-Making and Strategy" in the Department of Economics at Texas A&M University. The focus of the course is on applications of principles of game theory to real-world examples; the experiments are each designed to illustrate one of the key principles.

The course is a "writing-intensive" course. Most of the experiments have an associated list of questions for students to ask themselves as they participate in the experiment. In the course, students write brief essays of 350-400 words around one of these questions, or a related topic of their own choosing. Alternately, these questions can be used to initiate class discussion at the conclusion of the experiment, or at the next class meeting.

1. Sequential search Cost-benefit tradeoffs; expected value calculations.
2. Information cascades Bayes Rule and probabilistic reasoning; thinking about other players' actions
3. Prisoner's dilemma Dominant strategies; the prisoner's dilemma; one-shot versus repeated interaction
4. Equilibrium and focal points Equilibrium in pure coordination games; focal points
5. Coordination Tensions between cooperation and conflict; the stag hunt (assurance) game and lock-in; the battle of the sexes
6. Commitment Sequential-move versus simultaneous-move games; the value of commitment
7. Stripped-down poker A minimalistic poker game; randomization as optimal strategy; rational justification for bluffing; Bayes' Rule
8. Signaling Asymmetric information; separating and pooling equilibria
9. Agendas Strategic voting; Condorcet's paradox