A new version of the Stock Trading Game, a rite of passage for MBA students at the Yale School of Management for more than 30 years, is being tested one last time at Yale before being rolled out to the public, as students crowd a classroom in Edward P. Evans Hall classroom on a cold December night.
The students, all members of the MBA for Executives Class of 2021, open their laptops, as Roger Ibbotson, professor in the practice emeritus of management, gives them a rundown on how the online game works, and why a camera crew is on hand, filming them all tonight.
“The game is going to be rolled out to other universities, and in corporate settings, for the first time in its history, and the crew is here working on promotional materials,” Ibbotson explains. “Other people have always been interested in this game, and now, after a long process, Yale is making it available.”
The game begins. Some EMBA students are matching wits with the market for the first time, and the learning curve is steep.
“Everybody starts with a portfolio,” Ibbotson instructs. “You can trade as much as you want. You can share information. This is like a real market. Your goal is to outperform the market portfolio.”
One student, who works in trading at Goldman Sachs, tells her classmates: “This is just a way to simulate what happens every day. Try and get a vibe going.”
“But isn’t being a dealer a way to make money?” asks another. “All you’ve got to do is buy low and sell high, right?”
“We’re allowed to share information,” a third student ventures. “Do we all want to give each other peeks?”
It was just last year that another EMBA student, Brad Wayman ’19, first proposed taking Yale SOM’s iconic game beyond the Yale firewall. Wayman, the head of U.S. mortgage sales at Citibank, and his classmate Matt Sware ’19 were so impressed by the game that they approached Ibbotson about making it available beyond Yale.
“Professor Ibbotson immediately put us in contact with the SOM Case Research and Development team,” says Wayman. “He believes that the game is a unique tool to teach the fundamentals of the equity market and can be leveraged to teach financial literacy and help develop the next generation of financial leaders.”
Wayman adds, “Financial literacy is not taught in public schools, and it’s not widely accessible to the public until higher education. The game that Roger has developed will spur education and discussion about markets and financial literacy, not just at business schools but across the general public.”
Yale SOM’s Case Research and Development team worked with the university’s technology center to create a platform so that the game can be licensed outside of Yale. Yale SOM’s International Center for Finance and Citigroup also sponsored the project, which has taken about nine months, says Jaan Elias, director of case research and development.
“We’ve already received quite a bit of interest from different kinds of institutions because the game is a fun but effective introduction to the theory and mechanics of capital markets and stock trading,” says Julie Hawthorne ’20, a Yale SOM staff member and a student in the EMBA program, who has served as product manager for the new online game.
Ibbotson originally created the game—then conducted with written buy and sell orders on a mock trading floor—while he was teaching at the University of Chicago. He brought it to Yale SOM in 1984 and used it in his finance courses. In 2006 the entire first-year class in the full-time MBA program began playing the game at the New Haven Lawn Club as part of the core Investor course. The EMBA program soon followed.
In 2011, Ibbotson enlisted the help of the Yale Center for Media and Instructional Innovation to bring the game online. Since then, outside interest in the digital version has grown.
“It’s a real-world simulation, and people are drawn to that,” Ibbotson says. “It’s learning-by-doing, and from what I’ve seen, watching so many of my students play, it’s also a lot of fun.”