kids as market-makers

During Cousins Camp this week, I taught the kids a fun trading game.

Each kid has a private number that only they know—like how many students are in their homeroom.

When the market opens players can bid, reflecting the price they would “pay” if the total of all the numbers was a stock, or they can offer, reflecting how much they would “sell” that total for.

For example, when the market closes and we tally the sum of how many kids were in their homeroom classes combined we might get a settlement value of say 140. So if Zak bought a contract for 133 from Max, Zak would have made $7 on the trade while Max’s p/l is -$7.

It’s “open outcry” like a trading pit.

We played many rounds with examples like:

• how many pushups you can do in one go
• how many unique video games you played since the start of 2025
• your best friend’s birthday represented as day of the year (ie December 31 = 365, assume no leap year)…a fun note about this one — the market coalesced around 247 or early September. The actual settlement 2 months earlier. But out of curiosity, we googled the most common birth months — in the US it toggles between Sep, Oct, and Aug which makes me think the solution to a fertility crisis is just having another Christmas in the summertime. Brings new meaning to needing a second coming to save humanity. (Relax, it’s just a joke. Anyway, the fertility crisis is global, a fact that is quite inconvenient to my western logic)
• average of each player’s recent mile time (this was crazy because the market’s final clearing price was liquidly trading at 8:37 and the settlement value was 8:39! On the one hand, it’s a great wisdom of crowds moment but it was also weird — one of the kids had to walk the last time they did the mile and got something in the elevens — I told her she should have been the best bid in the room given her private info, but she wasn’t as aggressive as she should be and that turned out to be correct. When her time was revealed, the other kids couldn’t believe how high it was but that surprise means they weren’t selling aggressively enough — the market was quite balanced at 8:37)

It’s easy enough to play this at home. Just have players write their private info on an index card and you can just start making bids and offers.

A few tips:

• People get confused with official trading language like “bid for” and “sold at” but you can emphasize the importance of just being clear…instruct them to say “I’m trying to buy for 50 because I think the value is higher” or “I’m tryiing to sell at 50 because I think it’s worth less” until everyone gets the hang of it.
• If 2 people trade try to trade with each other but it turns out they are both trying to buy or both trying to sell (“a same side trade”), a common mistake when you are getting used to this, just cancel the transaction as there is “no meeting of the minds” in the parlance of trading.
• Write all your trades on your card— number of contracts, price, counterparty.
• Your final p/l is the sum of (settlement price – buy price) for all longs and (sell price – settlement price) for all shorts. The game is zero sum — the sum of everyone’s p/l should be 0 or the accounting is wrong.
• If you run out of ideas for which everyone has a private value you can use a deck of cards. For example, you could deal 2 cards to say all 10 players and decree that the settlement value will be “the sum of the red cards when they are all revealed at the end” (treating face cards as 10s)
• A fun wrinkle — partway through the game randomly choose a player to reveal their private info. This simulates “new coming out in the market”. An astute player will “bayesian update” their fair value effectively. It helps to have a “theory of mind” of how others will update theirs. This really starts getting to the essence of trading!

The 9-year-olds struggled. I think the concept was a bit too abstract for them to “buy” and “sell” numbers.

The older kids (12 to 14) loved it — “one more round, one more round”. Some kids understood it better than others but one of the fun things about this game is I’ve run stuff like this so many times (usually with adults) that I can tell a number of things about how they think. And very quickly. Every parent likes to hear about their kids, so when the kids weren’t around, I shared my observations with the parents which they enjoyed, usually laughing, nodding with either that “oh I know” look or just beaming with pride.

And a final thought I offered up the kids since they had so much fun…you can trade anything!

When they’re being driven up to the studio they can make markets on how many Teslas they see on the road . Or how many Cybertrucks.

If you pays 10 in the Tesla market and sell 6 in the Cybertruck market you have synthetically bought “4 non-cybertruck Teslas”. Fun stuff. Options arbitrage is just around the corner!

[For those that watched the bar bets video from earlier this week you’ll recognize these as “future style” bets]