Incentives and Economic Systems: A Classroom Exercise

This set of classroom simulations highlights the different incentives individuals face under economic systems defined by private property, by common property, and by a blend of the two. In each system, participants must choose how hard they will work to produce a consumption good, balancing the pleasure of consuming that good against the displeasure of work. In addition to illustrating how each economic system creates different incentives to put forth effort, the simulations can illustrate marginal reasoning, facilitate the explicit calculation of deadweight loss, and illustrate important concepts in game theory.