Information Economics:

Learning by Simulation, Discussion, and Lecture

By: Prof. Sheizaf Rafaeli and Daphne Raban

The Center for the Study of the Information Society

University of Haifa

infosoc@research.haifa.ac.il

http://infosoc.haifa.ac.il

Tel: +97248288492

Information economics has many paradoxes. One of the hardest-to-explain phenomena is the co-existence of a commercial market for information and a bazaar of free information. “The Lemonade Stand” is a business game that was developed to illustrate, through experience, some of the problematics inherent in the value of information. “The Lemonade Stand” is a Java-based game that can be played from any computer having an Internet connection. Participants make decisions in an environment in which information has business significance. These decisions include raw materials purchases, inventory management, and the sale of lemonade under varying market conditions. One of the factors influencing market conditions is the changing weather. The weather forecast is important for players of the game. Weather information is offered for purchase or for sale in variants of the game. Participants are asked to place bids for either purchasing or selling weather information. Every player plays six game periods with feedback on his/her profits at the end of each period. This feedback fuels the excitement of the players and their motivation to improve their game performance.

At the end of the entire simulation session -- in our application of the game -- we conduct a discussion with the players, listen to their impressions, and reveal to them some surprising phenomena. The discussion is followed by a lecture on information economics, explaining how a commercial market and a free bazaar can and do co-exist.

The workshop described is suitable for anyone who uses information-- managers, engineers, administrators, students, etc..

· The workshop is available in English and in Hebrew.

· It can be conducted in any computer lab with Internet connection.

· No prior knowledge of economics or business administration is needed.

· The entire workshop, including the simulation, discussion, and lecture, takes about three hours.

· Cost depends on the location and the number of participants.