Play to Win
Antonio Mello, professor of finance at the Wisconsin School of Business, relied on case studies to teach concepts in his international finance class, but he found that his students had trouble connecting with the material.
“Finance can be very complex and boring, and you need students to participate,” Mello says. “I knew that my students played computer games, so I studied the technology and created a game to help the students make disciplined decisions despite uncertainty and with limited information as in a real dynamic financial market.”
The resulting game is a groundbreaking classroom tool that illustrates finance principles using forex (foreign exchange currency market) trading. Seeking to provide an active learning experience, Mello created the game based on his work at MIT–Sloan, as a hedge fund manager, and at the European Central Bank. It’s inspiring students in ways more traditional teaching can’t.
“The game adds a valuable dimension to classroom lectures and slides,” says Mello. “Once students have learned the concepts, game play speeds up learning tremendously. It helps you to learn about yourself and how to cope with pressure. Some students lose patience when they can’t go to the next level, others take large risks after they lose money. They learn how to cope with margin calls and are forced to liquidate positions.”
Henrik Egly (BBA ’15), who is working with Mello to perfect the game, agrees. “This game gives you time to learn,” says Egly. “You hear students playing the game and shouting ‘Now I get it.’”
The computer game, which is the first such game designed specifically for business students, teaches four different investment styles used by professional traders and brokers worldwide:
- Carry trade—the traditional “buy high interest rate currencies, sell low interest rate currencies.”
- Momentum—buy the winning currencies, foreign stocks, and bonds, sell the losers.
- Contrarian/value-buy— the losing currencies, foreign stocks, and bonds because you expect they’ll win next time, and sell the winners because you expect they’ve reached their winning limit.
- Simple macroeconomic or macro fundamentals—decisions are based on budget deficit, monetary policy, inflation, and the current account deficit indicators that affect currencies.
Students must commit to a strategy for each level and play it until the level is complete. “This allows students to understand the meaning of the strategy and the implications of sticking to it through the ups and downs of the market,” says Mello. “You make a decision and see the results.”
And what are the results of Mello’s innovative teaching tool? The game is about to enter beta testing, and the positive student feedback promises great outcomes for Mello’s students in the months and years ahead.