Teaching Managerial Economics with Dynamic Competitive Simulations: Wargaming in the Classroom (Economics EDUCATION ARTICLES‪)‬

ABSTRACT All business firms face risks and uncertainties of various sorts in their day to day decision making. Drawing on military wargames to simulate battlefield conditions, business decision makers fabricate real world conditions so that managers must act and react to each other's actions. This paper illustrates how these simulations can be used effectively in teaching economics. Specifically, I develop wargaming exercises that center attention on the role of the entrepreneur in subjectively ascertaining and dealing with oligopolistic uncertainties to which his firm is subject. Since no one firm can perfectly anticipate either the actions of its rivals or how its rivals will react to actions by the firm under consideration, uncertainty is inherent in this market structure. In the classroom, the students are sensitized to anticipate and react expeditiously to market developments and to tailor solutions to authentic business problems. These simulations open the students' eyes to potential problems caused by competitive interaction and introduces them to a business decision practice commonly found today in the competitive market place.