The Effects of Search Costs on Prices and Price Dispersion: A Web-Based Classroom Game

Abstract

Business and information systems students often have difficulty understanding the market forces behind Internet prices. This paper describes a web-based classroom game used to demonstrate the effects of reduced search costs on price levels and price disper-sion as well as the possible benefits to both buyers and sellers. The game is available for free and does not require any specialized hardware or software; the only equipment needed is a computer connected to the internet running a standard browser. The game takes less than 20 minutes and students may participate simultaneously or separately.

Keywords: Classroom Games, Search Costs and Information Systems Economics

JEL Classification: A20