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Economics, Mass Psychology and Physics

The Seesaw Game communicates simple mechanisms which can frequently lead to extreme price fluctuations in financial markets. This simple game further allows for testing different theories on the emergence of price bubbles and crashes.

Economic theories often describe markets as systems of agents who act according to rational expectations. According to these game theories, the interplay of agents leads to equilibria where said agents' interests are coordinated in an optimal way. Therefore, these theories don't explain observed extreme price fluctuations which share several statistical properties with turbulence or earthquakes. In analogy to these physical systems, physicists recently began to model the price movements in financial markets based on the complex interactions of many heterogeneous agents.

By playing the Seesaw Game, you can help us to test the following questions and hypotheses on actual human behaviour.

  • Will a group coordinate in an optimal way?
    We suspect, that this is possible even if single humans don't act according to game theory.
  • Will bubbles and extreme price fluctuations emerge from a process of self-organisation?
    We suspect, that this dynamics only requires few principles inherent to speculative trading.
  • Can such a critical dynamics emerge in a fully transparent market and without irrational or malign behaviour of the players?
    We suspect that paradoxically market efficiency can destabilise a market.

Participating in the Seesaw Game is simple, fun, and conveys the ups and downs of a financial market in an intuitive way. Furthermore, understanding the game allows you to more easily grasp the highly topical scientific backgrounds.