Decisions and Macroeconomics: Development and Implementation of a Simulation Game

For many students macroeconomics is very abstract; it is difficult for them to imagine that the theories are fundamentally about the coordination of human decisions. The author developed a simulation game called steer the economy that creates the possibility for students to make the decisions of the firms that are implicit in macroeconomic models. The game consists of a computer network where players manage their own company for the equivalent of 150 months. The players make decisions about prices, wages, labor demand, and investment. All players together are the complete production sector of the economy. Consumption, government, and the central bank are incorporated in the computer model and can be manipulated by the game leader. The interaction between the player decisions generates fluctuations in, for example, unemployment, inflation, real wages, and investment. Players can increase the profits of their companies in the game by analyzing micro- and macroeconomic dynamics in the game economy. A system of feedback is provided to generate the necessary skills.