The Yale School of Management hosted its first Yale Stock Trading Game Competition last month, bringing together more than 300 students from around the world to play SOM finance professor Roger Ibbotson. signature stock trading game.
Ibbotson developed the game in the 1970s to teach students the basics of trading on the stock market. His game has been widely played by SOM students since then, and SOM’s Assistant Director of Global Initiatives Caitlin Donovan said that this competition marks the first time that schools in the Global Network for Advanced Management – a network of 32 business schools across all over the world – gathered to play the game.
Each participating school held a practice round in the last week of January and then competed in seven different games from the first round. The third of the best players in the first round advanced to the final round, which took place on February 17. Seunghee Cho, a student at the European School of Management and Technology in Berlin, took first place in the competition, earning 43.29 percent return on investment.
“It is very exciting to have the opportunity to leverage the network in the first place to bring these students together around the world in this friendly and invigorating competition,” said Donovan. “At the end of the day, everyone is in a totally different time zone, getting together to play together on the internet for 30 minutes. Without the network, this would not be happening at all. “
Each participant starts the game with five shares of each of the four fictional companies being traded, in addition to $ 200 in cash. They can then trade stocks and buy additional information about companies, and whoever has the most valuable portfolio after 30 minutes wins.
Ibbotson explained that the gaming market is independent, which means that for every profitable trade a player makes, another player is on the losing side. He said that about half of the players outperform the market and half of the players underperform the market.
Every year, Ibbotson makes students in his Executive MBA class play his game. He said that about a third of these students have training in asset management, but people with that experience do not perform significantly better in the game.
“What I think is that people in asset management negotiate more,” said Ibbotson. “The other difference is between men and women. I think men negotiate more than women. They don’t do better, they just negotiate more. “
He said that trading more tends to indicate overconfidence in the ability to beat the stock market and that men tend to be more confident. Sometimes it’s worth it, he said, and men tend to be on the edge, while women’s performance tends to cluster in the middle of the group.
When Donovan first played the game, she had little market experience and called herself a “beginner-level broker.” She added that the game is easy to play at any level of experience.
“In the beginning, you can play with any amount of knowledge,” she said. “And then, as the game progresses, it kind of eliminates the weaker players, which is how markets work, anyway. So it really simulates the market. “
As a beginner, Donovan said she was “paralyzed” and “excited”. She said that being able to participate firsthand is much more engaging and rewarding than reading about sales and negotiations or watching an educational video.
According to Ibbotson, the game directly teaches students the mechanics of the market. He explained that this includes learning about market orders, leverage, short selling and borrowing money, as well as how information about companies influences stock prices.
Each 30-minute game simulates approximately a year of the stock market, said Ibbotson.
“It’s a quick way to have a lot of action,” he said. “In many other trading games they play for people, you buy real shares or something and, over the course of a semester, see what happens to your real shares. … It’s okay to create portfolios, but it’s not great for measuring performance, while here you can play an entire game and it feels like a year. “
When Ibbotson invented the game, it was not electronic and needed to be played in person. Although he has been online for many years, Donovan said that SOM’s Case Research and Development Team and the University’s IT department’s Custom Applications Development team worked together over the fall to strengthen the site and allow it to be accessed from around the world.
Gregory MacDonald, a multimedia producer for SOM’s Case Study Research Group, said the competition went very well, despite some brief problems with Internet connectivity in China and England. Due to the nature of the game, it must be played live with stable Internet access.
“I think the most interesting aspect was how quickly some groups of students learned that sharing information with each other can be a productive strategy,” wrote MacDonald in an email to News. “Professor Ibbotson encourages players to communicate, but we always approach the game as essentially an individual game and not a team sport. The tournament showed that in a competitive environment, at least, this is not always the case. “
The Global Network for Advanced Management was launched in 2012 to connect students and resources from different regions of the world, under the direction of the former Rector of SOM Edward Snyder.
Julia Brown | firstname.lastname@example.org