Ag Econ, Let’s Talk A-Boat It!

By: Katherine French, Carmen Mew, Jessica Yu, Claire Seibel, Candace Miu

This week, Governor’s School students split into their majors for two classes a day. Each afternoon, Agricultural Economics students participated in a business management activity led by Professor Curt Stevenson. Students were divided into groups of three to four, with each group representing one “fishing company.” Companies consisted of a skipper, an accountant, and negotiator(s). These roles had different responsibilities including buying and selling boats, determining where to fish, and keeping some boats docked.

In the fishing simulation, negotiations and strategies were utilized to ensure the highest amount of profit. Auctions and trades for ships among different companies were held, requiring calculated and risky choices. All of these decisions were accompanied by set expenses that may have led the company into debt, requiring them to use interest-carrying loans. Each round of decisions was equivalent to one year of fishing, and at the end of each year, companies’ decisions were inputted into a computer program that determined how many fish each company caught based on weather conditions. Afterwards, Professor Stevenson calculated assets and bank balances, ranking each company accordingly. The ultimate goal of the game was to posses the highest amount of assets at the end of the “ten year” period. However, before reaching that 10 year mark, the companies experienced multiple abrupt challenges.

                    Photographs taken by Katherine French

As they received the results from the eighth year, many students were surprised to discover that the companies had negative assets and bank balances! Each company incurred substantial losses for seemingly no apparent reason. Then, Professor Stevenson explained what had happened: they had depleted all of the area’s fish in just seven years. He introduced the term “overcapitalization,” which means the number of ships in the fishing fleet surpassed the sustainable capacity. Another factor contributing to the depletion was that the fish were public resources (no regulations allocated a specific amount to any one company), so there were no incentives to participate in conservation, leading to a complete exhaustion of the water.

In addition to having fun as theoretical fishing company leaders, Ag Econ students were able to learn about the difficulty that is sustainable resource management, a problem that economists frequently address today. One might even say, they learned to not be so shellfish!

To explore the simulation, follow this link!

https://mitsloan.mit.edu/LearningEdge/simulations/fishbanks/Pages/fish-banks.aspx

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