Quality Uncertainty and Market Failure: An Interactive Model to Conduct Classroom Experiments
We present an interactive simulation game designed to teach the market effects of quality uncertainty. The instructor can conduct experiments in a virtual classroom, in which students using a computer are embedded in an online market playing the role of buyers. Many industrial engineering programs set aside these market effects because the impact of poor quality in customer behavior is very difficult to evaluate. This work complements traditional classroom approaches to quality improvement and standardization giving engineering students a clear justification for techniques to control and reduce variability in industrial and manufacturing processes. We propose a parameterization for a game and discuss the expected dynamics. Buyers with enough bad experiences form biased quality estimations and stop buying, which can make the market collapse. The game also allows exploring the influence of social networks as mechanism to enhance market performance. The game has been implemented in Netlogo and Hubnet platform.
KeywordsAsymmetric information Quality uncertainty Classroom experiments Engineering education Social networks
The authors would like to thank Dr. Luis R. Izquierdo for his advice and comments on this paper. The authors acknowledge support from the Spanish MICINN Project CSD2010-00034 (SimulPast CONSOLIDER-INGENIO 2010).
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