Above is a short (first 7-9 minutes only) clip from Nobel Prize winning economist Robert Shiller’s Coursera.org course on finance. This is an excerpt form a lecture on the development of futures markets and future’s exchanges – relevant to us becasue he has a very interesting and little known history lesson about how modern future’s trading started way back in the 17th century in open outcry rice market trading in Japan. (PS Next time it comes online on coursera.org you definitely want to “sit in” on it – or you can go directly to Open Yale: so for example essentially the same topic is in Lecture 15 part 2 here on open yale)
Econ 103 students: your task is this: What as the problem in the Dojima Japan open outcry rice markets in the 17th century that we did NOT have in our open-outcry auction market in class Tuesday May 12? Shiller also discusses a solution – the development of a rice futures market at that early time – which you may find interesting to listen to. Did we have that solution in our experimental market? DId we need it?