Teacher Resources

The Incentive Game

This game is designed to teach one of the most important fundamental concepts in economics: The idea that incentives matter and people will change their behavior in a predictable way when their incentives change. 

Materials: a penny, a one-dollar bill, a five-dollar bill, a ten-dollar bill

Monetary cost: $16.01 (but can be scaled down)

Time: 5 minutes


HOW IT WORKS:

1. Place a penny on a table or desk outside of the immediate grasp of a student in the front of the classroom and then make the following declaration: “The first person who gets out of their seat and comes up to the front of the classroom and grabs this penny gets to keep it.”  

2. Waits until a student claims the penny. In most cases, it takes students a few seconds to realize that class will not continue until someone gets the penny and a student will slowly amble to the front of the classroom to claim the penny.

3. Repeat this process with a $1 bill and note how much more quickly a student got up to claim a $1 bill rather than a penny. Repeat this process again with a five-dollar bill and then, finally, with a ten-dollar bill. Usually, by the time you drop the ten-dollar bill you will have students diving over the table in their attempt to retrieve it which provides a humorous and memorable learning experience for the rest of the class. Note: You may have to make a disclaimer that all students have to be in their seats until you drop each bill.

4. After completing the game, explain to students the concept of how incentives matter and how people change their behavior in a predictable way. When the benefit of getting out of your chair and coming to the front of the room (in terms of the dollar amount collected) increases then more people will more ambitiously try to collect the money, a result that should certainly be expected. This game essentially provides the same lesson as the example that more people will bend over to pick up a $1 bill lying on the sidewalk than a penny, but the game demonstrates it more dynamically so that students will remember it (especially those who went diving over the table for the $10 bill). 

Resource Details

Academic Level

High School or University

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