Spanish Real Estate Bubble: A Classroom Experiment

Abstract

The European Higher Education Area (EHEA) requires development of teaching methodologies that encourage active participation by students in the autonomous learning process, taking the figure of the professor as the mediator. On the other hand, the economy is a fundamental aspect in today’s society insofar that it contributes to explaining the behaviour of individuals. In this sense, the experimental economy applied in lecture rooms is presented as an innovative educational procedure that is perfectly adapted to university teaching, since it facilitates acquisition and consolidation of curricular knowledge and favours the development of capabilities by students, whilst at the same time improving the quality of teaching and has a positive impact on the interest students have in the subject. This paper describes the application of an economic experiment as an active learning method to prove the mechanisms used to set prices. The experience took place at the ESIC Business and Marketing School Valencia university centre, within the subject of “Spanish Economy” in Official Business Management and Administration degrees and in Marketing and Sales Management degrees. The starting point for this experience was the work by Radim Bohacek (2002), adding changes aimed at empirically explaining inflation, the real estate bubble and subsequent economic crisis in Spain. The obtained results prove that this educational experience favours learning of the economic concepts students study, and stimulates proactive interest in the subject. From the obtained results a second experiment is proposed in order to consolidate concepts concerning price setting mechanisms in the presence of intervention by the Public Sector (taxes and subsidies) or establishing incentives that model collusive behaviour leading to situations where market offers are concentrated in oligopolies.