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The trade game.

Article Excerpt
The Trade Game (TG) is a classroom exercise that illustrates the concept of gains from trade. While most students have little difficulty with the notion that trade is mutually beneficial in some vague sense, the concrete notion that trade "creates value" is too abstract for many to grasp. This exercise allows students to see and measure the creation of value through trade. (1)

Step 1: Collect items

The instructor needs to acquire a wide array of small inexpensive trinkets that will be distributed to the students at the beginning of the exercise. Purchasing items at a dollar store is usually the most cost-effective approach. Figure 1 lists some of the items that we have used. Ideally, the collection will include some items that are more likely to be desired by males and others more likely to be liked by females. It is also acceptable if some items are likely to be superior to other items in the eyes of most everyone.

Step 2: Distribute the items to the class

Randomly distribute one item to each student as they are seated at their desks. It sometimes works better to "cheat"...

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