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George Mason Law and Economics
Center
PPE Program, June 2006
Morning—Hour 2– Wealth Maximization
Game
June 15, 2006
Eric Rasmusen,
[email protected]
1
REVIEW
Welath maximization
2
Trading Game Rules I
I find acting out helps to learn. My own field of game
theory.
1. The instructor will give each member of the class an item or
items as a gift. You will get to keep these.
2. Write on your scoresheet your personal values, the
amounts for which you would be willing to sell the items back
to the instructor. Your value might be for your own
consumption, or as a memento of this class, or the value to
you for having the item to give as a gift to someone else
after the class is over.
3
Trading Game Rules II
3. Everyone will freely trade items. One or more items can be
traded for another, but no money or other goods may
change hands, because we want the exchange of the gift
items to be self-contained. Also for this reason, please do
not consume (eat, use and throw away, etc.) the items
before the end of the game.
4. Again write on your scoresheet your personal values, the
amounts for which you would be willing to sell your current
items back to the instructor. Your value might be for your
own consumption, or as a memento of this class, or the
value to you for having the item to give as a gift to someone
else after the class is over.
5. Hand your list in to the instructor.
4
IDEAS
1. The dollar value of wealth increases with trade. This is
what ``wealth maximization'' means.
2. Trade is productive just like technology.
3. The total value is probably less than the cost at the store to
the instructor. He does not know what the students like.
4. Trade is itself costly. It takes time and energy.
5. Retailing and wholesaling is an increasingly big part of GDP.
In 2004-2005 wholesaling was 6% and retailing was 8%, a
total of 14%, compared to 13% for government and 13% for
manufacturing (From the 2004-2005 Statistical Abstract of
5
the US).