Objective: Students will explore the concept of coalition bonds as a metaphor for trust-based investments, analyzing how trust, risk, and the cost of broken promises influence financial and economic outcomes.
Materials Needed:
- Handouts defining bonds and their economic purpose, including coalition bonds as a metaphor.
- Examples of modern investments reliant on trust, such as government bonds or corporate partnerships.
Lesson Steps:
1. Introduction (10 minutes):
- Define bonds: A financial instrument where an issuer borrows money from investors and promises repayment with interest.
- Introduce coalition bonds as a metaphor: Trust-based agreements that require stakeholders to uphold their commitments for mutual benefit.
- Highlight parallels to modern investments, where trust and reputation significantly affect risk and returns.
2. Viewing Clip (5 minutes):
- Show or summarize the Game of Thrones scenario where Robb Stark promises to marry Walder Frey’s daughter in exchange for military support in his campaign against the Lannisters.
- Set the context: Relate the agreement to the concept of a bond, where each party must fulfill their obligations for mutual benefit.
3. Group Discussion (15 minutes):
- Divide students into small groups to discuss:
- How is Robb Stark’s promise to Walder Frey similar to a financial bond?
- What risks arise when one party fails to fulfill their obligation in a coalition or financial agreement?
- What could Robb have done to strengthen the agreement and ensure its success?
- How do these ideas relate to modern investments like government or corporate bonds?
4. Concept Application (20 minutes):
- Case Study Analysis:
- Provide examples of trust-based investments:
- Government bonds and the importance of maintaining credibility to secure low interest rates.
- Corporate partnerships reliant on mutual commitments.
- Spouses make a trust-based investment when they enter a marriage.
- Ask students to analyze:
- What ensures trust in these agreements?
- How does breaking promises (e.g., defaulting on bonds) impact stakeholders? How might it impact markets?
- What mechanisms (e.g., legal contracts, collateral) help reduce risk?
- Discuss the parallels between Robb Stark’s broken promise and the consequences of default in financial markets, such as damaged reputation and increased future costs.
5. Wrap-Up and Reflection (10 minutes):
- Summarize the importance of trust in financial and coalition-based agreements:
- Trust reduces risk and increases cooperation.
- Breaking promises damages reputation and raises future costs.
- Pose a reflective question: How does trust influence financial decisions in your life or future career?
6. Activity or Homework (45 minutes):
- Explore the Origins of the Great Recession
- Students research the origins, depth, and scope of the Great Recession.
- Students then relate those factors to the collapse of trust-based commitments.
- Ask them to discuss the Great Recession, including the roles of:
- Subprime mortgage lending
- Speculative investment in housing
- Government bailouts of failing financial institutions.