Hoisted from the comments: for a Hayekian game

Commenter Max Marty writes:

I've often wished for a Simcity-ish simulation that operated on actual market principles. I even tried getting a copy of a simulation called "Capitalism" but its just a different flavor of micro-management at the agent level.

Alright, who wants to start a Hayekian inspired game company with me?

I've wondered what a Hayekian Sim City game would look like. If you start ground up with a new city, like Sim City, the game would be trivial: just set an optimal rule structure at the start and make sure there's an insurance market against Godzilla attacks.

A more interesting variant could work something like the following. You're the city comptroller. You've been appointed by the newly-elected mayor to sort out the mess that the city's in. He was elected on a reform platform, but he's worried that if he goes too far, he'll be turfed in the next election and he's more than happy to make you scapegoat if necessary. You get polling data on which issues the public thinks are currently most important and reactions to your latest policy moves. All of the economics works as it should, but implementing optimal policy too quickly could see you turfed from office. So, if voters think education is important, you might still find that a move to eliminate zoning and turn the public schools into charter schools would yield protests and strikes by the teachers' unions (still protected by State-level union rules so you can't just fire the lot of them) and protests by folks who would suffer large losses to property values with the eliminations of restrictive zoning (rich folks basically). What small moves can you make to build support towards optimal policy? How many compromises on other margins are you willing to accept to make small changes on the more important margin?

Or, if folks are upset about the high costs of taxicabs, you might find that eliminating taxicab licensing (restrictions on entry: the New York Medallion system) would dramatically reduce fares but also would yield gridlock as cab owners protested by blocking key intersections and a wave of voter opposition as a poor immigrant who invested his life savings to buy a taxicab medallion, which he planned on passing on to his son, talks about how the reforms would bankrupt him. Can you devise a policy that compensates the losers but remains popular with voters? Tullock says no, but I still think a buy-out of medallion holders financed by a bond issue that's paid off using a tax on taxi fares would be a Pareto move. I'm almost surely wrong though, because there are no Pareto moves left in politics (== $20 on the sidewalk) and because Tullock says there's no system that would work. I just don't know why it wouldn't work.

Add in machinations of the challenger for office and some incentives to implement policies that induce his supporters to leave town: the Curley Effect.

Then add in random swings in voter opinion based on whether the local TV station aired an expose on the free coffee city workers get in their lunchrooms or whether Barry White has just sung a song about how the city should eliminate whacking day.

The game sounds depressing. And frustrating. And is sufficient reason never to run for public office.