{"id":196,"date":"2011-10-02T12:13:37","date_gmt":"2011-10-02T16:13:37","guid":{"rendered":"http:\/\/www.craigperler.com\/blog\/?p=196"},"modified":"2024-06-06T23:26:15","modified_gmt":"2024-06-07T03:26:15","slug":"trading-games-and-chickens-cows-and-horses","status":"publish","type":"post","link":"https:\/\/www.craigperler.com\/blog\/2011\/10\/02\/trading-games-and-chickens-cows-and-horses\/","title":{"rendered":"Trading Game… and Chickens, Cows and Horses"},"content":{"rendered":"
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I’ve been teaching an Order and Execution Management class to staff at work, and to illustrate a few points on accounting, price setting, the importance of communication, the difference between intrinsic value and market value, and market behavior, I developed a trading game: an animal bartering game based on the premise made in this white paper, Developments In Business Simulation & Experiential Learning, Volume 24, 1997<\/a>.<\/p>\n\n\n\n

If anyone’s interested in re-creating the game, feel free to use this spreadsheet<\/a> as a starting point. I was very surprised to find nothing like this was readily available on the web.<\/p>\n\n\n\n

Game Flow<\/strong><\/h2>\n\n\n\n

the class was divided into several teams, and each team was given a set of goals, and some starting inventory: some number of horses, chickens, goats, cows, pigs and sheep.\u00a0 The goal was to barter with other teams to trade away your starting inventory for animals required by your goals – achieve your target requirements, get rid of as much of your starting inventory as possible, and if able, get more of your target requirement animals. For example, I might have 2 horses and require 5 chickens. My goal here is to trade away my 2 horses, and procure at least 5 chickens – the more chickens, the better. For the most part, each team started with a different set of inventory and requirements.<\/p>\n\n\n\n

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The “market” (the class) held different aggregate\u00a0levels of supply and demand for different animals – this implied prices as some animals were more in demand and in less supply, and thus worth more relative to other animals.\u00a0 Part of the trading game was to discover these imbalances and work with them.<\/p>\n\n\n

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The trading game played twice, each round of trading lasting 10 minutes.\u00a0 In the first round, we found that several animals had been killed off and others had bred – lessons of bad accounting. There were no such occurrences in the second round. In the second round, each team had the same requirements and inventory as in the first round, so the goal was to improve upon first round scores.\u00a0 Lastly, following the second round, each team rated each other team with regards to perceived levels of aggression and control of information.\u00a0 The expectation was that there’d be correlations between aggression, information control, and scores.<\/p>\n\n\n\n

Scoring<\/strong> <\/h2>\n\n\n\n

Though somewhat arbitrary was done as follows: 2 points for each animal from your starting inventory not sold; 1 point for each animal required by your goals that’s not procured; 3 points for buying an animal you didn’t need; and -1 point for each animal procured above and beyond your target (eg., if I need 5 chickens, but get 6, then that 6th chicken gets me -1 point). <\/p>\n\n\n\n

Scoring is like golf, where you want to minimize your total points. Further, points were then weighted by how hard it was to buy\/sell a given animal due to supply and demand, and scores were normalized by a “difficulty” factor, a metric that described how hard it was for a given team to play the game due to what animals they started with, and what their goals were. Difficulty increases the more you want and the less you have; however, this is tempered by the fact that certain animals are harder to attain.<\/p>\n\n\n

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Observations<\/strong><\/h2>\n\n\n\n

Unfortunately, the expected correlations didn’t show up. The winner of the second round was rated as being most aggressive, and least likely to give out information; however, there was no broad-based correlation. Feedback from the class was that the lack of correlations may have been due to constraints imposed by the room (small classroom, so everyone was basically clumped into a small area), and time constraints (with more than 10 minutes, there’d be more opportunity to strategize). Another possibility is that the starting inventories and requirements were not structured or balanced well enough.\u00a0If I played through a second iteration, I’d consider restructuring the starting inventories to make them a bit more closely aligned.<\/p>\n\n\n

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