Structuring Auction Process part of ACM Pedagogic Resources:ACM/FaCE:Projects:Integrating Sustainability into the Undergraduate Curriculum:Activities
Law and economics has developed a rich literature regarding the allocation of property rights in the form of permits. This understanding is the foundation of the much discussed cap and trade approach to regulating GHG. However, the expanded use of permits has produced a new round of literature that examines the "lessons learned" from experiments with permit systems in environmental regulation. For example, much attention has been placed on the experience and subsequent reform of the EU's Emission Trading Program. In that permits, auctions, trading systems, price floors/caps, initial allocation concerns of equity and efficiency, etc. are all somewhat foreign and sterile to most college students, this assignment hopes to introduce these issues in a more familiar and less complicated application before looking at the more burdensome and challenging policy applications.
Common Resource Experiment: Simulating Tragedy of the Commons in a Classroom part of ACM Pedagogic Resources:ACM/FaCE:Projects:Integrating Sustainability into the Undergraduate Curriculum:Activities
This experimental activity is based on the research experiments conducted in 2009 and provides a simple introduction into the problem of the Tragedy of the Commons (Hardin, 1968), allowing the instructor to illustrate how a group of rational individual agents will end up using a resource to a larger extent that would have been optimal from the point of view of a society. If needed the second part of this activity can present students with ways of solving the commons problem without government regulation. In this activity each student is endowed with 15 hours of labor and has to allocate this labor between fishing and construction. Construction provides a guaranteed (but low) payoff. The payoff from fishing depends on the number of hours this person as well as other people spent fishing, and is higher than the one from construction, thus creating the incentive to overfish. The production functions can be easily modified for varying number of students in the class. The social optimum occurs when everyone limits their effort to 2/3 of the available time, but in reality people will end up spending their entire time fishing. This will illustrate the tragedy of the commons and conflict of common and individual interests. The second session (day 2) will allow students to talk to each other before making their fishing decisions thus showing how communication can help solve the problem of the commons.