Simulation games: an application to public economics

Abstract

As part of a project to promote active learning we incorporated simulation games into our lectures on public economics at the University of Barcelona. This paper describes a game used to illustrate the main aspects of the Tiebout model of public sector decentralization. By means of a simple voting mechanism, students have to decide the level of social amenities they wish to have in their hall of residence. After the second year, the classroom splits in two and students are able to move. Hence, overall welfare increases with sorting. By linking preferences to income we then illustrate the equity implications of the model, since segregation by income increases the inequality between groups. The exercise is complemented with a brief questionnaire designed to gather information about students¿ perceptions of this sort of game. The results showed that students rated the exercise highly.