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The Externalities Game (TEG)

The Externalities Game (TEG). Review of Rules :. Each player is assigned 1 of 3 random roles: Luxury, Intermediate or Subsistence Producer

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The Externalities Game (TEG)

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  1. The Externalities Game (TEG)

  2. Review of Rules: • Each player is assigned 1 of 3 random roles: Luxury, Intermediate or Subsistence Producer • Students will make production decisions that result in points (for themselves) and externality costs (shared by everyone). Whereas points accumulate linearly with production, costs expand exponentially. • Production Decisions will be kept confidential, unless players choose to reveal their decision to others • Grades are determined by the points that are produced individually, minus the social costs that are produced collectively.

  3. Review of Rules: • Randomly assigned roles: • Luxury Producer (L): gain the most points per unit of production, but also emit the greatest amount of externalities • Max production level = 10 • Intermediate Producer (I): gain the second most points per unit of production, and emit the second highest amount of externalities • Max production level = 55 • Subsistence Producer (S):gain the least amount of points per unit of production, but emit the least amount of externalities • Max production level = 240

  4. Review of Rules: • A round of game play consists of two steps: • 1) simultaneous production decisions by all players, followed up by, • 2) simultaneous point-sharing decisions. • Roles are randomly assigned again for each round of play. This means that you may have different roles in each round

  5. Example of Index Card S28 Susan Spierre 150 +83 Give 3 points To Paris +80

  6. Review of Rules: • Players can only produce whole goods up to their maximum production capacity and not less than 0. (No negative production). • Players can make deals during the game to share points or limit production for the greater good, however the Instructor cannot enforce agreements. Players may lie to each other about their behaviors, and in many cases these lies may go undetected. • Players do not have to share with anyone if they do not choose to. The people they share with and they amount they share is solely of their own discretion and will be kept confidential.

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