Criticisms of the Use of Simulations in Economics: A Rebuttal

Abstract

"While simulations and computer-based exercises have been acclaimed (and extensively used) by business academics as effective tools for reinforcing management (and general business) principles and decision making under uncertainty, similar types of exercises in economics have not been wellreceived. A careful review of previous economic studies, which generally challenged the effectiveness of such exercises, raises serious questions concerning the way in which simulation exercises were incorporated in the classroom. Further analysis suggests the dissatisfaction with simulations in economics were related to two key factors: (1) design and (2) the implementation of the exercises. The authors present a number at suggestions for effective design and use of computer-based simulations. Some of the recommendations include fundamental design requirements such as: ease in data entry, detailed and comprehensive manuals for both instructors and students, regular status reports on student performance, worksheets and guidelines for both decision making and applications of economic concepts, and computer generated summary reports for the instructor. For effective implementation of an economic simulation the activity must be treated as a supplement and not a substitute for traditional lectures and that regular assignments relating economic concepts to the simulation are required. If properly designed and integrated into the classroom, the authors argue that computerized simulations would prove to be beneficial pedagogical tools in economics. "