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A simulation approach to a world with learning

Author

Listed:
  • Andreu, Rafael

    (IESE Business School)

  • Riverola, Josep

    (IESE Business School)

  • Rosanas, Josep M.

    (IESE Business School)

  • de Santiago, Rafael

    (IESE Business School)

Abstract

The main objective of the firm in economics-based models is to maximize profit. Dropping this objective in order to make the models more realistic complicates the analysis and is seldom done, thus leaving management action out of the picture. In this paper we try to understand how management decisions give rise to aggregate results. In particular, we develop a simulation model of an economy in which emphasis is placed on managers' decision-making criteria. The key decision managers have to make is which projects their firms will undertake. Project selection has an impact on the firm, as the firm's profile may change through learning.

Suggested Citation

  • Andreu, Rafael & Riverola, Josep & Rosanas, Josep M. & de Santiago, Rafael, 2010. "A simulation approach to a world with learning," IESE Research Papers D/886, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0886
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    File URL: http://www.iese.edu/research/pdfs/DI-0886-E.pdf
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    Keywords

    Management; Economics; Learning; Simulation;
    All these keywords.

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