The Investor Trading Game

On a cool evening in November, the entire first-year class crammed into the ballroom of the New Haven Lawn Club, which for a few hours was transformed into a raucous, seething stock trading pit. Students shouted buy or sell orders, as others watched the big board on the ballroom stage for clues to which way the four companies being traded were headed. They weren’t real companies, and the money changing hands had a Monopoly quality to it. This was the Investor Trading Game, a staple of the integrated MBA curriculum, an annual event that has students competing against the market (and each other) in a mock exchange that builds on and reinforces the lessons of the Investor Perspective course, taught by Nicholas Barberis, the Stephen & Camille Schramm professor of finance.

The game was created by Roger Ibbotson, professor in the practice of finance, as a way to let students experience of how individuals function within a market. Students are given a set amount of money, some shares of four fictional companies (Red, Green, Orange, and Yellow) and a small amount of information on each. They can buy more information from the “bank,” short sell, and take loans. At the end of the game, people see how they matched up against the market. “I really learned how experience is shaped by perceptions,” said Elizabeth Turnball ’11, whose team posted a return 67% higher than the market. “The trading floor can appear chaotic, even totally random. But it’s quite sophisticated and I learned a tremendous amount. It’s one of the most valuable things we’ve done.”