Managing the Free-Rider Effect in a Top-Down Security Analysis Course

Abstract

As an example of managing the free-rider problem, we report our experiences related to integrating group work associated with
the top-down approach to fundamental analysis. Using group projects and sharing information with other groups and students is
an effective method to reduce the work load for each individual student, while maintaining the scope of the top-down approach.
By changing the composition of the groups at each level of the top-down approach, we are able to reduce the free-rider effect
inherent in group projects. Overall, our methodology accomplishes the following three objectives: (1) reducing student workload,
(2) sharing information, information sources, and analysis, and (3) reducing the free-rider problem. We find that 88% of the
students agreed or strongly agreed that the top-down approach “had more educational value as a group project than as an
individual project.” We also find that 82% of the students agreed or strongly agreed that changing the group composition helped
reduce the free-rider problem.