Each November, the entire first year class at Yale SOM gathers in the ballroom of the New Haven Lawn Club to take part in the Investor Trading Game.
A staple of the core curriculum, the game pits teams of students against one another and the market in a mock stock exchange that builds on and reinforces the lessons of the Investor Perspective course, taught by Nicholas Barberis, the Stephen & Camille Schramm professor of finance. For a few hours, the room is transformed into a raucous trading pit, as students shout buy and sell orders, while a big board on stage tracks the prices of four fictitious companies.
The game was created by Roger Ibbotson, professor in the practice of finance, as a way to let students experience of how individuals function within a market. Students are given a set amount of money, some shares of four fictional companies (Red, Green, Orange, and Yellow) and a small amount of information on each. They can buy more information from the “bank,” short sell, and take loans. At the end of the game, people see how they matched up against the market.