Creator of the Yale Stock Trading Game Roger Ibboston introduces the basic elements of the game and the concepts he designed it to teach.
About the Yale SOM Stock Trading Game
The Yale School of Management Stock Trading Game is an educational tool intended to provide a fun, quick, and effective introduction to the concepts and mechanics of capital markets and stock trades. Designed by Roger Ibbotson, Emeritus Professor of the Practice of Finance at Yale School of Management, the game has become a beloved tradition among 1st-year EMBA students. The Stock Trading Game is intended for use in a classroom setting with individuals of all levels of experience.
In the Stock Trading Game, each player is a portfolio manager tasked with optimizing their portfolio through the use of public information, private information, and stock trades. The objective of the game is to beat the market by maximizing portfolio wealth. Trading takes place only with other players in the game through market orders, limit orders, bids, and asks. Players can hold both positive and negative positions (short selling), and can choose to purchase additional information, called "peeks," to improve their understanding of the value of a security. The game ends after 25 minutes, at which point the system computes the player's portfolio value and compares it with the market portfolio, as well as the performance of every other player in the game. The true value of stock prices are revealed for the four stocks available for trading.
The Stock Trading Game was opened to the public for the first time in June of 2019.
- Objective: Beat the Market
- Number of Players: Unlimited (minimum = 20)
- Practice Game: yes (5 minutes)
- Game Length: 25 minutes
- Rounds: 2 (total = 60 min)
The Stock Trading Game differs from other simulations in that it leverages strategic interactions among students, rather than computer simulations or real markets, to introduce the concepts of investing, trading, and market theory. After several games, instructors are encouraged to debrief with students about how information affects stock prices, whether the market was efficient or inefficient and why, and how different groups of students fared overall.
Zero Sum Games
Efficient Capital Markets & Tests of Efficiency
Imperfect Information and Security Pricing
Trading Basics: Market Orders, Limit Orders, Bids, and Asks
Short Selling (Holding Long or Short Positions)
Computing Portfolio Returns, including Annualized/Geometric Returns
Buying on Margin (e.g., Negative Cash, Loans)