Econ 375: Computational Simulation of Markets and Behavior


An elective for
the Economics major,
the Economics minor, and
the Computational Methods minor.

Description

We will explore models of firms’ decision making and their market interaction by running, modifying, and creating computer simulations. The models will be based on existing mathematical models which we will study first by describing the models’ Nash equilibria. After building the simulations, we will modify them to next observe and describe how the outcomes are affected by the modifications. We will focus on simulation as an aid in both of the following activities: practicing decision making and explaining firms’ behavior in markets.

Objectives

The dual goals pursued by running and building simulations are (1) learning-by-doing while “playing games” and (2) explaining observed behavior. By studying models that are described mathematically and by building models described in computer code, students will (3) learn the value of formalizing their assumptions about firm behavior and market interaction and (4) appreciate the possible effects of changing assumptions: sometimes those changes that make a model more “realistic” have important effects on the outcomes, and sometimes they have little substantive effect, only making the model more complex and difficult to implement.

Prerequisites:

CM 151 Computational Methods or similar programming course/experience approved by the instructor
ECON331 Industrial Organization or ECON360 Marketing Science
(or ECON211 Intermediate Microeconomics with permission of the instructor)

The development of this course was supported by NSF grants 0722211/0722203 and BCS-079458.