Steven C. Gold

Developments in Business Gaming

This article examines developments in business simulation gaming during the past 40 years. Covered in this article are a brief history of business games, the changing technology employed in the development and use of business games, changes in why business games are adopted and used, changes in how business games are administered, and the current state of business gaming. Readers interested in developments in other areas of simulation gaming (urban planning, social studies, ecology, economics, geography, health, etc.) are encouraged to look at other articles appearing during the 40th anniversary year of Simulation & Gaming and at the many fine articles that appeared in the silver anniversary issue of Simulation & Gaming (December 1995).

Historical review of algorithm development for computerized business simulations

This article presents a 25-year historical review of algorithm development for computerized business simulations. The articles selected were drawn extensively from the annual proceedings of the Association for Business Simulation and Experiential Learning (ABSEL) conferences. The authors have categorized the historical review into two broad areas: functional business topics and special topics of interest. Both narrative and summary tables address marketing, accounting, finance, human resource, and production/ operations areas. The special topics of interest reviewed include the algorithms for quality and the time-based modeling concerns. The authors conclude the review with issues future modelers of business games should consider.

Computerized stock screening rules for portfolio selection

Abstract Recent studies have uncovered several systematic patterns that increase the probability that individual investors can select stock portfolios with excess returns. This study tests the feasibility of using a commercially available computerized stock screening program for investors to take advantage of these patterns. The screening program searches the three major exchanges and selects stocks on both fundamental and technical indicators: low price-to-sales ratio, small firm size, accelerating stock prices above their 50 day moving average, high trading volume, and high earnings growth. Of the 18 models tested between 1994 and 1998, those that allow for selection between exchanges yield portfolio returns that significantly exceed the average market indices.

Modeling Short-Run Cost and Production Functions in Computerized Business Simulations

This article develops an algorithm to model short-run cost and production functions using Sheppards lemma in computerized business simulations. The algorithm is derived using duality theory to maintain consistency between the production technology and cost relationships of the firm. The short-run cost function is shown to depend on: variable factor prices, the production rate, and the level of the fixed factors. Sheppards lemma is applied to derive the cost minimizing input demand levels based on the characteristics of the short-run cost function. A recommended system of equations is presented and discussed to simulate the theoretical model of the firm. A numerical example is given to illustrate how the parameters of the equation set can be estimated and how the functions behave. The system is shown to be flexible and may be applied to model a wide array of cost structures.

System-dynamics-based modeling of business simulation algorithms

Research on the internal algorithms used to model business simulations have focused on individual components of the business system. Yet the business environment is complex in nature, characterized by interdependencies and nonlinear relationships that require a systems approach if effective game design is to be achieved. In this article, a system-dynamics-basedd interactive model of a business enterprise simulation is developed consisting of 18 equations. The model draws heavily on the economic theory of the firm and the expansive body of prior research on the design of business simulations. The focus is on the linkages between the production, cost, revenues, profits, and stock market value of the firm. A working model of the recommended system is tested, and its empirical properties are discussed. It is found that to develop effective algorithms within each functional area of business, the dynamic impacts on the whole enterprise must be evaluated.

The Production Frontier: Modeling Production in Computerized Business Simulations

The production function defines the technology of the business and the relationship between the inputs used by the business and the quantity of goods or services provided. The specification of this relationship should play an important role in business or management simulations. The costs of doing business and profits are directly related to the production function. The production function will influence the firm’s optimal mix of inputs, inventory policy, capital utilization, and capital investment. Business and management simulations are modeled to represent the &dquo;real world&dquo; firm. Participants in a simulation should gain insights into the workings of the real world through involvement with the simulation. As a result, it is necessary that the functions and algorithms within the simulation be consistent with the economic theory of production. Although the economic theory of production is well known, the task of incorporating the theoretical properties into a computerized business simulation is not straightforward, as Goosen (1986) stated:

The Validity and Effectiveness of a Business Game Beta Test

New gaming software must undergo a series of tests before its general release. The objective of these tests is to ensure that the simulation is appropriate for its intended audience, plays well, possesses the requisite level of fidelity to the system being modeled, and is free from programming errors. This article first catalogs the design parameters associated with a good beta test. It then compares this ideal against the beta test created for a first-generation online business game released by a major online game publisher. It then examines the actual behaviors and results produced by the study’s beta testers to determine the degree the publisher and authors could be confident that the game met the criteria of targeted audience propriety, playability, model fidelity, and algorithmic accuracy. In this instance, this well-designed beta test could not guarantee the release of error-free software, and the likely reasons for this outcome are identified.

Changing Customer Preferences and Product Characteristics in the Design of Demand Functions

A mathematical approach is developed to model product characteristics in demand functions that considers the complexities of time, technological change, and consumer preferences. Changing product characteristics are represented by assigning a new set of attributes desired by the consumer. A demand function, which allows for intertemporal changes in product attributes and consumer preferences, is simulated. Incorporating new product development in contemporary business simulations allows a number of enrichments. These include direct market influences from technology and intertemporal changes in consumer tastes, the creation of market segment diversity in a single product simulation, creating a structure permitting firms to target specific markets with different characteristics, including fact-based data for use in customer satisfaction surveys, and the creation of a modeling approach that introduces quality factors as attributes in a simulated demand function.

A study of business game stock price algorithms

A number of studies have examined the algorithms that business games use to simulate real-world company functions. This study extends that research tradition into the area of the firms stock price algorithm while increasing the range of validates considered. An investigation of the stock price algorithms associated with six computer-based management games revealed diversity in the number and treatment of the variables used to create company stock prices. This diversity created radically different firm stock prices. These valuations also differed under simulation firm conditions of economic growth and decline. Most stock price results would meet a face validity test under conditions of improving firm performance, but most would be challenged under conditions of company decline.

The design of an ITS-based business simulation: a new epistemology for learning

This article discusses the design and use of an intelligent tutoring system (ITS)for computerized business simulations. It is argued that intelligent tutoring systems are a natural complement to computerized business simulations and could significantly enhance their pedagogical effectiveness. The use of ITS as an instructional technology and its success are reviewed. Afundamental modelforan ITS-based business simulation ispresented. The user interface and the linkbetween the ITS and the simulation are examined. It is recommended that the ITS consist of three distinct modules: expert consultant, diagnostic testing, andpedagogical support. The integration of ITS with business simulations offers a new epistemologyfor learning, the significance of which has yet to be fully understood.