Caveat: I don’t know anything about how the stock market works except from what I’ve learned through Wikipedia and other online sources.
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Simplistically put, a stock exchange like NYSE and Nasdaq enables investors who wish to purchase a specified number of shares at a particular price find others willing to sell the same. The value of a stock depends on the buyers and sellers themselves; for instance, if there are more buyers than sellers, then the buyers will be more willing to specify a higher price (or bid). So the stock value a stock exchange posts reflects the price at which a particular stock most recently traded.
Compare this with your typical stock market game. Stocks are purchased from and sold to the bank, not between other shareholders. Share values fluctuate not necessarily by supply-and-demand but by other external factors such as special cards that enable a player to raise or lower a stock value by a specified amount. These games sometimes feature a separate area or board that indicates a non-negotiable price at which a stock may be purchased or sold.
Many consider the 18xx stock market system one of the most realistic. However, stocks are exchanged through the bank, not with other shareholders. Shares do fluctuate from supply-and-demand, but they also fluctuate by decisions made by a corporation’s president. 18xx games feature a share value board that indicates the price at which a share may be purchased or sold and controls how much a share rises or falls when a particular event occurs.
Nonetheless, these three features -- exchanging of stocks only through the bank, fluctuating share values not due to supply-and-demand, and specific prices at which a stock may be exchanged -- elegantly abstracts the chaos and volatility created when thousands of investors are exchanging stocks. It’s probably why so many stock market games, from Stock Ticker to the 18xx series, have these characteristics.
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I’d like to develop a stock market system with the following characteristics:
* Only the players themselves determine the value of a stock.
* Stocks (for the most part) are purchased and sold only between players (not the bank).
The difficulty in creating such a system is ensuring a market exists for low valued stocks. In a “traditional” stock market game, the bank is always willing to purchase your low valued stocks. However, in this system, there might be situations in which it is impossible to sell them.
Can you think of other games that have implemented this kind of stock market system, or suggest other ways to implement it?
I’ve thought of two ideas:
1. Players have one of the following choices:
[a] Purchase a stock from the bank at a price determined by the founder of the corporation (similar to 18xx games).
[b] Sell one or more stocks by auction. A group of stocks may contain stocks from different corporations. Other players may bid with money or other stocks. The auctioneer chooses which offer to take. That auctioneer may also decline all offers.
[c] Forced purchase (similar to the trading mechanism in Kuhhandel/You’re Bluffing!) A player chooses another player’s stock to purchase. The purchaser places a secret amount of money in front of the seller. The seller may accept the money and surrender the stock, or he may offer a counter-offer to the purchaser. If the purchaser’s offer is larger, then he receives the stock from the seller, and the seller receives his counter-offer back. If the seller’s offer is larger, the seller keeps his stock and the purchaser’s offer, while the purchaser keeps the seller’s counter-offer.
[d] Forced sale, which would be similar to the forced purchase.
2. Allow the players to play a third role (the first two are investor and corporation president) as market makers or specialists. Investors sell and purchase stocks through these people, who in turn profit from the spread between a stock’s purchase price and its selling price. The mechanism could be similar to Eric Solomon’s Middleman.
