Bounded rationality is a key concept with implications across all areas of economics. To help students better understand the nature, causes and forms of bounded rationality in individual choice, the authors present a flexible classroom experiment. Beyond providing students with some first-hand evidence of bounded rationality, the experiment shows…

The authors present two classroom experiments on technology licensing. The first classroom experiment introduces the concept of royalty stacking. Students learn that noncooperative pricing of royalties for complementary intellectual property rights leads to a double-marginalization effect. Cooperation solves the problem and is welfare-improving.…

This paper provides details on a classroom experiment that focuses on returns to foreign assets given uncertain future exchange rates. Students are assigned the role of foreign analysts and decide how much to invest abroad given their expectations about future exchange rates. The experiment allows students to practice calculating the returns to…

In this article, the authors describe a classroom experiment on exchange rates appropriate for undergraduate courses in macroeconomics, international economics, and money and banking. Student teams compete by managing virtual portfolios of six foreign currencies over a period of several weeks. Trading requires a few minutes in class. Students gain…

The authors describe how the Monty Hall Dilemma, a well-known choice anomaly, can be demonstrated with a simple and versatile classroom experiment. In addition to demonstrating the anomaly, the experiment can be used to introduce students to some institutional modifications that have been shown to ameliorate it. This experiment, which can be…

In this article, the author presents an asymmetric version of the familiar public goods classroom experiment, in which some players are given more tokens to invest than others, and players collectively decide whether to divide the return to the group investment asymmetrically as well. The asymmetry between players raises normative issues about…

The author provides a general model to incentivize student involvement in an economics course on an ongoing basis. Rather than presenting students with a discrete number of diverse experiments to illustrate different economic concepts, he opts for the adoption of a single experiment that lives for the duration of the semester. This approach…

The authors describe a Web-based classroom experiment with two assets: cash and a stock that pays a random dividend. The interest rate on cash, coupled with a well-chosen final redemption value for the stock, induces a flat trajectory for the fundamental value of the stock. However, prices typically rise above this value during a session. The…

Uses a simple classroom experiment to develop the economic model of monopoly. Introduces students to the nature of the monopoly problem and motivates them to think of the associated effects. Highlights the role of information and fairness ideals in determining economic outcomes. (RLH)

Describes a classroom game called the prisoner's dilemma that illustrates the conflict between social incentives to cooperate and private incentives to defect. Explains that it is a simple card game involving a large number of students. States that the students should be introduced to the real-world applications of the game. (CMK)

Describes a classroom experiment in which students see how competitive markets underproduce in the presence of a positive externality. States that this experiment is used in a principles of economics course to introduce the idea of market failure. Explains that participants take the role of buyers of education, sellers of education, or interested…

Discusses the size-weight illusion that occurs when a person lifts two equal-weight objects differing in size and perceives the larger object as lighter than the small object. Describes several inexpensive techniques for demonstrating the size-weight illusion and reviews some relevant issues concerning this phenomena. (MJP)

Describes a demonstration that recreates the central features of taste aversion (learning to avoid distinctively flavored food or drink paired with gastrointestinal illness) research. Rats are allowed to drink a saccharine flavored solution and then are given an injection of sodium chloride. They associate the unpleasant effects with the solution.…

Describes a simple exercise that demonstrates how content knowledge facilitates the rate of retrieval of domain-specific information. Music experts and novice students quickly name any seven words that relate to music. Reliably, the experts complete the task more quickly. Students rated this demonstration as both educational and interesting. (MJP)

The Key School in Indianapolis, an experimental elementary school, was founded by eight experienced teachers who believed that schools can be enjoyable as well as rigorous. This report focuses on one feature of the school, the Flow Activities Room (FAR). The development of the FAR was based on the school's commitment to the theories of multiple…