For those who have been early readers of the blog, you might remember the earlier Balloon test which we featured a few years back. We lamented the day it disappeared. That lamentation was replaced with exultation when I recently came across a new version of it. Not perfect. Not visually appealing.  But it does the job of showing our tolerance for risk. 

Here's the interactive: 

Note: Yes, the game has a typo, it should read TRIALS not Trails

Here's how the game is played:

• You gain money every time you press PUMP which fills up the balloon.
• At random times, the balloon will burst after you pump and you will lose all the points you might have accumulated for that specific trial. 
• At any point during the trial you can COLLECT $$$ which fills up your piggy bank (the one in the middle)
• The goal: Have the most money in your piggy back after 10 TRIALS. (You can go to 30 but I find it gets monotonous beyond 10)
• Make it competitive and share your score with your classmates

Questions:

• Pre-game question: How do you feel about risk when it comes to investing? How would you feel if the stock you bought dropped by 20%?
• How many points did you earn after 10 trials (rounds)? 
• What was your strategy to play the game? Did your first or second trial impact how you played the game? 
• Compare the emotional reaction you had having the balloon burst to COLLECTING $. Which was stronger? 
  • If like most people, losses we experience about twice as strongly as we enjoy gains. That phenomenon is known as loss aversion. 

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Here are more interactives that have been featured recently on the blog. 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.