Barter Trading

Karpoff, Jonathan M. "Barter Trading as a Microeconomics Teaching Device." Journal of Economic Education. 15 (Summer 1984) 226-236.

This "barter trading game" has students exchange real goods under various constraints in a small amount of time spread out over a period of seven weeks. At the beginning of the semester, an artificial two-good, pure-exchange world within each class is introduced. Students are allocated trading chits for each of the goods, apples and Hershey candy bars, in exchange for a required two dollars. Each student receives 16 Hershey bar and 20 apple chits (one chit equaling Hershey bar or 1/5 apple), resulting in 4 Hershey bars and 4 apples per student. A dictator (instructor) rules the trading game’s world and periodically issues proclamations affecting the market in which the goods are exchanged. Each week, new regulations affecting trade are imposed. The week of trading is opened at the beginning of the week and then closed at the end, only to be reopened the following week. Except for the first week, students conduct all trading outside of class. There are three requirements for the students: (1) at least one exchange was required in each market period; (2) a report documenting one’s exchange activity would be filed at the end of each week; and (3) the proclamations of the two-good world’s dictator, issued at the beginning of each week, would be strictly followed. In the report, students were required to answer one or two questions related to the regulation imposed that week, which corresponded to material covered in class. At the end of each market period, a few minutes of class time was used to discuss the last week’s regulations and their effects before the next trading period was opened. Regulations are described in a table.