Explore limits on strict rationality in face of seemingly unfair behavior. In groups of 2, one student demands a fee from another student (from 0% to 100% of total profit), which in turn accepts or rejects the offer; profits for both are only realized if the fee is accepted.
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Demonstrate how the structure of an offer can attract only the sub-segment of customers with the worst economics. With the US healthcare data as background, 1 or 2 students act as health insurers (defining the insurance price) and the rest of the class acts as potential customers with a range of expected health expenses (accepting/refusing the insurance).
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Plot demand, supply, or supply and demand curves to understand the relationship between price and quantity as well as customer/supplier surpluses. Students will be prompted for their maximum willingness to pay (customers/demand side) or the minimum price they would accept (suppliers/supply side) to buy/sell a product.
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Explain the impact of differentiation, the number of players, and collaboration/competition on triggering or avoiding a price war. In groups of 2-4, students price a product (differentiated or commoditized) and analyze the sales outcomes after each of many turns.
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